Kelly Ayotte

Online Sales Taxes - Aug 1, 2012

Kelly Ayotte
August 01, 2012— Washington, D.C.
Statement to Commerce, Science and Transportation Committee
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This proposal we discuss today is very critical to New Hampshire and to other states that have opted to not have a sales tax. I really want to welcome our colleagues who are here, all three of whom I have great respect for—Senator Durbin, Senator Enzi and Senator Alexander—so thank you very much for being here to personally introduce your bill.

Under current Supreme Court precedent, in the absence of a sufficient nexus a state cannot reach beyond its borders to compel out-of-state vendors to collect taxes on a particular transaction. This is the result of the 1992 decision, Quill versus North Dakota, in which the Supreme Court held that requiring remote vendors to collect such tax taxes would place an unconstitutional burden on interstate commerce. By circumventing the court's will, the proposal under discussion today would undermine an important limitation of the Commerce Clause, the nexus requirement. By imposing collection requirement on businesses that have no physical presence outside of their home state, I fear the proposal may erode existing protections on state sovereignty. These concerns should resonate even for the 45 states that do not have a sales tax.

I'm particularly concerned about how this proposal will hurt small business in my home state of New Hampshire. Our online retailers for the first time would have to collect and remit sales taxes to over 9,600 tax jurisdictions across the country. New Hampshire has no sales tax. For non-sales tax states like New Hampshire—and I know my colleague in Alaska, Alaska does not have a sales tax either—this is simply an unfair burden for our businesses to bear. Why should New Hampshire businesses be penalized because we have chosen not to have a sales tax and as a result of it, frankly, we do have a leaner state government. This bill, in my view tramples, on New Hampshire's choice not to have a sales tax.

This week I received a letter from Joe Cortese, who owns Noble Spirit, an online retailer based in Pittsfield, New Hampshire. Noble Spirits sells stamps, coins, and other collectibles and in that letter Joe argues that under the proposal we discuss today "Other states where I have no presence or affiliation would mandate that I have to start collecting and remitting sales tax for items that my own state, New Hampshire, has deemed exempt." He further points out that "I don't believe it is fair to New Hampshire businesses that another state has the authority to turn us into their personal tax collector."

I couldn't agree with Joe more, and Joe's position mirrors that of many of businesses across New Hampshire that I have heard concerns about this bill. With your permission, Mr. Chairman, I would like to submit this letter for the record.

One final point: why would we in act legislation that would increase the cost of online commerce and also will cost consumers more? Ultimately it will be the consumers who pay for the cost of this. By imposing onerous collection requirements, this bill would be a disincentive for retailers to embrace the ecommerce model.

I understand that there are a number of witnesses here today who will have a different viewpoint, I certainly look forward to hearing from them, and I thank the chairman for the opportunity to give a statement today.

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