Online retail sales tax bill looks dead

Many brick-and-mortar stores struggling due to virtual competition

A bill in the Indiana General Assembly requiring online retailers to collect and remit a state sales tax emerged as a big topic during Monday’s Third House legislative session.

Since retailers with brick-and-mortar stores have to charge 7 percent more than their online competitors, the difference being the state sales tax that they collect, that’s not a level playing field, said State Rep. Milo Smith, R-Columbus.

Indianapolis-based HHGregg appliance and electronics retailer announced Friday that it was closing all of its 220 stores in 19 states by the end of May due to competition from online competitors, having filed for bankruptcy protection in March.

Senate Bill 545, which calls for online retailers who do business in Indiana to collect the tax, will not be heard in the House Ways and Means committee a second time, Smith told about 35 people in attendance at Columbus City Hall.

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That’s due to concern in the General Assembly that such a requirement might be overturned by the U.S. Supreme Court, Smith said.

But both Smith and Bartholomew County Assessor Lew Wilson said they would welcome a Supreme Court challenge to persuade Congress to take action on the matter nationally.

About 30 percent of all Indiana shopping centers are facing financial challenges due largely to online sales, Smith said.

If online retailers don’t have to pay the sales tax, it will have a substantially negative impact on county property tax revenue if more brick-and-mortar stores go under, Wilson and Columbus clothing store co-owner Tom Dell both said.

But since the measure appears to be dead for this year, Columbus resident Sharon Kreig suggested implementing a progressive income tax to raise revenue.

Another local resident, Jean Marr Wilkins, backed Kreig’s suggestion, saying such a tax would be the fairest of all alternatives.

“I don’t want to tax people based upon their income any more than we are doing now,” Smith said. “I do want to tax them when they buy things they don’t need to survive.”

Gas tax

The Senate has reduced the original proposed gas tax increase by about $300 million, and spread the increase to five additional cents a gallon annually over the next two years.

But there may also be a change in how much gas tax revenue will be coming back to Bartholomew County.

Historically, the Indiana Department of Transportation has received about 54 percent of monies received through the gas tax, while local units of government receive about 46 percent, Wilson said.

But the county assessor said a proposed change made in the Senate would give 80 percent of gas tax revenue to the state, while cities and counties would receive 20 percent.

In part, that proposal in House Bill 1002 was made to persuade cities and counties to apply for state grants for special road projects, rather than federal funding, said State Sen. Greg Walker, R-Columbus.

Due to its buying leverage, the state can purchase 30 percent more road than either the federal or local governments, Walker said.

Asked whether he believed that change will be approved, Walker said “it’s very much in play.”

Ricker’s

A compromise announced last week won’t be the last word in regard to the practice of convenience stores selling cold beer and carry-out liquor, Walker said.

The compromise allows the Ricker’s store in Columbus, as well as other locations with similar permits, to continue those sales only until permits run out — in March 2018 for the Columbus Ricker’s store, Walker said.

It also calls for stores to have 40 percent of their alcohol sales come from on-site consumption before being permitted to sell carry-out alcohol, Walker said.

“What we passed is sort of a holding place while the issue is discussed over the summer,” Walker said. “I think we’ll have a whole new set of bills come in January for consideration.”

Those bills might make it difficult for the store at the corner of 25th and North Cherry streets to renew its liquor license in next spring, Walker said.

Columbus resident Greg Scherschel told Smith and Walker he felt Ricker’s was handling its cold beer and liquors sales discreetly.

“I’m not too concerned,” Scherschel said.

But Walker said legislative leaders want to begin looking at such things as drunk driving and alcoholism rates in possible liquor law changes.

“I haven’t seen anything that tells me our laws are having a positive or negative impact,” Walker said.

Countdown

The 2017 Indiana General Assembly is scheduled to end no later than the end of next week, on April 22.

Unless a special session is called, the final Third House session of the year will be held at 7:30 a.m. Monday in the Cal Brand Meeting Room of Columbus City Hall, 123 Washington St.

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Mark Webber is a reporter for The Republic. He can be reached at mwebber@therepublic.com or 812-379-5636.