INDIANAPOLIS | Online retailers, including web giant Amazon.com, would be required to collect sales tax from Indiana customers starting July 1 under legislation approved by a House committee Thursday.
State Rep. Tom Dermody, R-LaPorte, the sponsor of House Bill 1007, believes the proposal will ensure fair competition between local stores and Internet merchants.
"I think that's what is most important to the brick-and-mortar businesses, who are people we all know in our communities that right now are at an unfair disadvantage," Dermody said. "It's going to put everybody on a level playing field."
Last summer former Gov. Mitch Daniels inked a deal with Amazon requiring the retailer to begin collecting and remitting Indiana's 7 percent sales tax starting in 2014.
Dermody said his legislation writes that agreement into state law, includes all web purchases and moves up the start date to give local stores equal footing in time for the 2013 back-to-school and holiday shopping seasons.
Hoosiers are currently required to pay 7 percent use tax on their Internet and catalog purchases, though few do. Just $1.8 million in use tax was collected during the 2012 budget year.
A Ball State University study estimates Indiana would have taken in between $39.6 million and $114.3 million that year if the state required web merchants to collect sales tax.
Dermody rejected the idea that his measure increases taxes. He said it simply does a better job collecting taxes that are already owed.
The four-term representative said Congress ought to enact a federal law to ensure each state is getting all the sales tax revenue it is due from online purchases.
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