Lawmakers in Jackson don’t always know what’s best for Columbus, according to City Attorney Jeff Turnage.
For instance, if the Legislature enforces sales tax collection on internet retail sales and designates that money only for infrastructure, that would bypass other needs for municipalities across the state for which they normally depend on sales tax revenue.
“I think at the local level we know what we need more than they do in Jackson,” Turnage told Columbus Exchange Club members Thursday at Lion Hills Center. “Why should we be told by the folks in Jackson to use it for infrastructure? We should at least have the flexibility to use it for other things.”
Turnage, also president for the Mississippi Municipal Attorneys Association, drafted a resolution for cities that would call on the Legislature to demand sales tax collection from online retailers — specifically out-of-state companies like Amazon, Wayfair and Zulily — as well as distribute that revenue to cities for general use at the same rate local sales tax collections already are.
Columbus City Council approved the resolution July 17, and Turnage sent a boilerplate copy to cities across the state in hopes they will follow suit, sending their approved versions to their respective legislative delegations. He said the movement is already gaining traction.
“I’ve gotten back several favorable responses,” Turnage said. “Oxford passed a similar resolution, so did Biloxi and a couple of other cities.”
Now, state law allows online retailers with no in-state presence to choose whether to charge the 7-percent state sales tax. While some retailers do collect the tax, the state holds the revenue instead of administering any to cities. In contrast, the state returns 18.5 percent of sales tax to cities from in-person transactions at physical stores.
But a June U.S. Supreme Court decision gave states the right to force remote online vendors to collect sales taxes. That has since opened discussions in Jackson that Gov. Phil Bryant may call a special legislative session for lawmakers to consider enacting such a law with hopes of using those funds for transportation infrastructure improvements, according to the Associated Press.
Increased online sales, however, have decreased in-store local purchases, making it more critical for online sales tax to be distributed the same as that from local purchases.
Turnage said that according to a source from the Municipality League, Bryant’s position is if the money is distributed to municipalities, it should be based on population.
However, Turnage argues that may not be the fairest way to distribute the funds because cities with the most online sales are not necessarily the largest population-wise.
“What about cities like Oxford who are spending hundreds of thousands of dollars on online sales, but do not have the largest population in the state? They, along with other municipalities, would be missing out on a lot of revenue they should be entitled to,” Turnage said.
Communications Director for the Mississippi Department of Revenue Katie Lawson, speaking to The Dispatch, said the issue of how to accurately circulate the tax collections is not one with an easy answer.
“There are issues the Legislature would have to resolve,” Lawson said. “The big one is the implications of reporting. It would be hard to determine who is buying from what city to determine what goes back to the city. Sellers like Amazon do keep addresses, but to ask them to know what city is in what county, unless they have the technology to handle that, the logistics would be a problem.”
Turnage admits he does not have a simple solution either, but it warrants brainstorming.
“We just need to think about it clearly,” Turnage said.
Reporter Slim Smith contributed to this report.
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