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Gov. Resists Online Sales Tax Push

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While some Republican governors have dropped their opposition to states’ taxing online sales, Gov. Susana Martinez is not about to hop on their bandwagon.

The governor “has been very clear that she does not favor the imposition of new taxes on New Mexicans,” her spokesman, Scott Darnell, said this week.

At issue is Congress’ consideration of proposals authorizing states to require online and other so-called remote sellers to collect sales taxes.

Darnell said the governor hasn’t had the opportunity to review any of the federal legislation.

Currently, because of U.S. Supreme Court decisions in 1967 and 1992, a state may not require such collections unless the out-of-state seller has a physical presence – a warehouse, for example – in the state.

But Neil Osten of the National Conference of State Legislatures says that appears likely to change, as local retailers – who must collect sales taxes – ramp up their complaints about unfairness even as cash-hungry states scrounge for more money.

“So this is $23 billion the Congress can give states that doesn’t cost the Congress a penny,” said Osten, the director of NCSL’s Washington, D.C., office.

The NCSL estimates that $23 billion will go uncollected this year across the nation from remote sales – about $11.4 billion from online sales, and the rest from more traditional sales such as mail order and catalogs.

For New Mexico, the NCSL’s estimates are $246 million in uncollected taxes this year, with about $120 million of that from online sales.

State officials’ estimates aren’t that high. A report done in 2010 by the Legislative Finance Committee and the Taxation and Revenue Department, based on 2007 figures, estimated that New Mexico had up to $76 million in unpaid taxes from online sales. There was no estimate for overall remote sales.

Finance and Administration Secretary Tom Clifford said the NCSL’s figures may be higher because national surveys don’t necessarily take into account the exemptions and deductions in state law that reduce what New Mexico collects. That bottom line would also be affected by whatever exceptions for small business were put into the federal legislation, he said.

“I think it’s fair to say there’s a big degree of uncertainty around these estimates,” Clifford said.

The Wall Street Journal reported this week that some Republican governors have done a turnabout on the issue, citing New Jersey Gov. Chris Christie’s recent endorsement of a bipartisan bill pending in Congress. He called taxing online sales “an important issue to all of the nation’s governors.”

Christie recently made a deal with Amazon.com under which Amazon will begin collecting the state’s 7 percent sales tax but not for another year, in exchange for putting job-creating distribution facilities in New Jersey. Three other states with GOP governors have struck similar deals, the newspaper reported.

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