INDIANAPOLIS | The Indiana House overwhelmingly approved legislation Monday requiring all online merchants, including web giant Amazon.com, to begin collecting the state's 7 percent sales tax on purchases made by Hoosier customers starting July 1.
House Bill 1007, which now goes to the Senate, changes a 2012 deal inked by Amazon and former Gov. Mitch Daniels that would have begun online sales tax collection on Jan. 1, 2014.
State Rep. Tom Dermody, R-LaPorte, the sponsor of the legislation, said since that Daniels deal was struck Amazon has negotiated with five other states and agreed to begin collecting sales tax on purchases made by their residents prior to 2014.
Dermody said that means there's no reason Amazon and other web merchants can't also begin collecting sales tax from Hoosiers this year.
He said local brick-and-mortar stores deserve to compete on a level playing field with Internet retailers.
"They're not asking for a special deal ... they're just asking for fairness," Dermody said. "I believe this is the best situation, as we talk about jobs, as we talk about the economy, to help our small businesses in Indiana."
State Rep. David Wolkins, R-Winona Lake, argued that scuttling the Amazon deal would make businesses reluctant to sign agreements with Indiana.
"I think this ruins our credibility," Wolkins said. "If I was a CEO of another company looking to Indiana, I'd say why should I believe you, you had the deal with Amazon and you broke it."
Despite Wolkins' passionate argument the Republican-controlled House approved the legislation, 79-18.
Hoosiers are already 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.