LANSING – With Congress failing to act and more states finding a way to fix what they see as a big loophole that allows online retailers to avoid charging a state sales tax, proponents in Michigan say the time for the Legislature to act is now.

“While Michigan waits, other states have taken action to protect their job makers,” Jim Hallan, president and CEO of the Michigan Retailers Association, said at a news conference Monday.

So far, nine states have begun to take action themselves, he said, after realizing that waiting for Congress to act will lead to nothing happening.

“They’ve taken their own destiny into their own hands,” Hallan said.

He said online retailers are using Michigan businesses as showcases, where customers test a product or try it on, only to purchase the same thing online and avoid paying Michigan’s 6 percent sales tax.

“It’s just not right and it’s also destructive to our economy,” he said.

Bill Golden, with Golden Shoes in Traverse City, said a customer purchased shoes from him over the holiday break and came back the next day to return them after being assured he had the right size. The customer then pulled out a smartphone and purchased the shoes online in front of Golden.

“Something has to be done here,” Mr. Golden said. “Because I lost a sale, the state lost its tax.”

Most recently, in Pennsylvania, the state changed its administrative rules to make online retailers with a distribution center subject to collecting and remitting the sales tax.

Hallan said they would prefer to have the change made in statute in Michigan.

“Why should one category of retail be treated differently than the other category? Let’s put it into law, let’s make it fair, let’s make it even for everybody,” he said.

Bipartisan bills introduced last year would do just that, he said.

Rep. Eileen Kowall (R-White Lake Township) and Rep. Jim Ananich (D-Flint) have said their bills, HB 5004 and HB 5005 , would fix that loophole.

The bills have had two hearings, but remain stuck in the House Tax Policy Committee.

Last week, the committee, on a nearly unanimous vote, reported HR 156 , which urges Congress to solve the issue at the federal level.

“We can’t wait for Congress to act, Michigan needs to act on the issue now,” Hallan said.

Hallan said some of the discomfort on the GOP side involves members that have signed a no-tax pledge and are concerned they would be violating it if they support the bills.

“It’s not a new tax, it’s an enforcement issue,” Hallan said.

Rep. Jud Gilbert (R-Algonac) said the vote on the resolution shouldn’t be seen as the end to the issue.

“The resolution is better than nothing,” he said.

He said the bills do not create a new tax and members would not be violating their pledge, but he said many still feel differently.

“It’s a tax that’s already owed by folks,” he said. “To me it’s a fairness issue. It’s an uphill deal, but I think there’s a certain logic to it.”

The question is how many Republican members are going to support the bills both in committee and on the floor, Gilbert said, adding he is talking to leadership on how to proceed.

Ari Adler, spokesperson for House Speaker Jase Bolger (R-Marshall), said no decision has been made on what to do with the bills. Among other things, he said there is still debate over how to balance fairness with local retailers and concerns of companies no longer wanting to have a location in Michigan if the tax change is made.

Hallan said they plan to keep the drumbeat going until action is taken.

“This issue will not go away,” he said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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