LANSING – Certain online sellers with a presence in the state could be required to begin collecting the 6 percent sales or use tax under legislation the House Tax Policy Committee reported Wednesday, but with some believing the issue needs to be resolved at the federal level, it is unclear how much traction the bills will have in the full House.

The legislation (HB 4202 and HB 4203) cleared the committee on a 9-1 vote with five abstentions. Six Republicans and three Democrats voted yes.

House Speaker Jase Bolger (R-Marshall) said the issue should really be solved on the federal level, and the question now is if the state’s legislation is going to accomplish what the federal government isn’t doing.

“You’re not hearing opposition from me, but you’re not hearing we’re going to run this tomorrow,” Bolger said to reporters after House session. “You’re hearing me wrestle with what the federal government is not doing. You’re hearing frustration from me that once again the federal government is not doing its job, so we’re left to pick up their slack. You’re hearing also concern about what’s the best policy.”

The “main street fairness” issue – so named because retailers say their businesses face a 6 percent disadvantage to the Amazons of the world who do not collect sales or use tax – is in the House Republicans action plan for the term. That action plan, unveiled earlier this year, declares, “We will remove the 6 percent competitive advantage that out-of-state online retailers enjoy over Michigan companies.”

Ari Adler, spokesperson for Bolger, said the speaker has always thought it was a federal issue, and it is still a part of the action plan. Adler said it is still unclear if the best course of action would involve state legislation.

Rep. Jeff Farrington (R-Utica), chair of the committee, said he abstained on the bills because he agreed it is a federal issue.

“Tax policy should be fair and across the board, and that can only be done at the federal level,” he said.

Asked if he thought the federal government would act on legislation soon (a bill passed through the U.S. Senate in May and is now in the U.S. House) Farrington said: “I’ve got no confidence at all.”

Rep. Vicki Barnett (D-Farmington Hills), minority vice chair of the committee, also abstained. Barnett said the Department of Treasury still was not certain if the tax collected on Internet sellers would be sales or use tax. She also said it is a federal issue, and something she supports on the federal level.

Most of the sales tax goes to the School Aid Fund, and most of the use tax goes to the General Fund. The House Fiscal Agency analysis says it appears the majority of revenue generated from the bills would be sales tax, but it depends on how it is remitted.

“It’s a tax increase on consumers who are looking for efficiency and convenience when they shop,” Barnett said after committee. “There’s no clear rules as to who would actually be forced to pay this tax. Probably, most importantly, the 1996 Telecommunications Act explicitly says that states are preempted from acting in this arena.”

According to the Department of Treasury, about $482.4 million in sales and use tax revenue will be uncollected in the 2013-14 fiscal year, and nearly 60 percent of that is due to online sales. Although residents are supposed to remit the taxes in income tax returns, many do not.

The House Fiscal Agency analysis, however, says it is unlikely the bills would generate much revenue because sellers can move affiliated partners and warehouses to other states. To generate more revenue, federal legislation would need to be passed.

Farrington had the Democrats vote before the Republicans in the committee to make sure they didn’t change their votes at the last minute, he said.

Rep. Aric Nesbitt (R-Lawton) was the lone no vote on both bills. Rep. Jon Switalski (D-Warren), Rep. Bob Genetski (R-Saugatuck) and Rep. Pat Somerville (R-New Boston) joined committee leadership in abstaining.

Voting yes were Rep. Harold Haugh (D-Roseville), Rep. Bill LaVoy (D-Monroe), Rep. Jim Townsend (D-Royal Oak), Rep. Margaret O’Brien (R-Portage), Rep. Kevin Cotter (R-Mount Pleasant), Rep. Frank Foster (R-Petoskey), Rep. Lisa Posthumus Lyons (R-Alto), Rep. Tim Kelly (R-Saginaw Township) and Rep. Amanda Price (R-Park Township).

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