Lawmakers consider sales tax on all Internet retailers

State lawmakers are considering a bill to require all Internet retailers to pay sales tax in Minnesota.

Members of the Senate Taxes Committee heard testimony from supporters and opponents of the measure Wednesday.

Several companies, including Best Buy, argue the tax is needed for a level playing field.

Ward Einess, who represents Best Buy, says his company wants internet retailers to meet the same standard that his company meets.

"This is not the imposition of a new tax. The general law as we sit here today is that if you go into a bricks-and-mortar, Minnesota-based retail establishment and you make the purchase of an item that's taxable, that same item is going to be taxable if you purchase it via the internet, if you purchase it via a catalog or purchase it via any other remote vender," he said.

Critics say the bill is unconstitutional because it violates the interstate commerce clause.

But Tom Hanson, a former state finance commissioner who now lobbies for, told lawmakers that a similar tax is the subject of a court case in New York.

Hanson said the law will likely be found unconstitutional.

"I've seen this a couple of times from the mid 90s through now where the state takes an action, depends on a revenue and then it gets litigated," Hanson said. "There's nothing worse than collecting $11 million for a couple of biennium and then having to pay it back because the U.S. Supreme Court ended up deciding differently."

Gov. Mark Dayton is proposing a similar Internet tax as part of his two-year budget plan.

Your support matters.

You make MPR News possible. Individual donations are behind the clarity in coverage from our reporters across the state, stories that connect us, and conversations that provide perspectives. Help ensure MPR remains a resource that brings Minnesotans together.