Internet Sales Tax Bill Passes Test Vote in Minnesota

Posted at: 04/26/2013 5:27 PM
Updated at: 04/26/2013 6:35 PM
By: Steph Crock

(ABC 6 News) -- The internet has become a big competition to physical stores as millions now shop online. Plus, it's got one more edge, people don't have to pay sales tax. Now, lawmakers are looking to change that.

Though you don't see it often, a majority of Republicans voted in favor of tacking on a tax to internet sales. The way it would work, you would be charged a tax based on which state you live in.

Shoppers are constantly hunting for a good deal. "Already we have people that come in here with their smart phones and they hit the little bar code on the tag and find out where they can buy it the cheapest," said the owner of Hanny's clothing store, Tim Berg.

Even without that nifty app, people are comparing prices online. "Yeah, I do more than in stores," said shopper Codey Temple.

Generally when they go to checkout online, it’s cheaper there because you don't have to pay local sales tax. "When I've shopped online, I was always surprised that I wasn't paying a tax," said shopper Michael McKeown.

In most cases this gives online stores the upper hand. "If the internet tax were to pass, it would help out other merchants who have to collect sales tax," said Berg. However in Minnesota, it’s not an issue because there isn’t a tax on clothing here, yet. "If we do get a sales tax on clothing, it will drive business to the internet where there's currently no sales tax," said Berg.

The Minnesota Senate’s budget proposal suggests taxing clothing in the state, and if that were the case… "If there were to be a sales tax on clothing, I definitely want to see the internet sales tax too," said Berg.

For the most part, stores think this would make it a level playing field, but shoppers are showing mixed reactions toward paying sales tax online.

"Definitely would have to go against it then," said Temple.

"The taxes are something that are needed for the states, they're needed for the country, so trying to always get away from them is not always a good thing," said McKeown.

The bill passed a test vote in the Senate by a milestone; 74 to 23, 27 of them Republicans. They're scheduled to actually vote on this in the Senate next week.