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Maine Delegation Split on Taxing Internet Sales

AUGUSTA, Maine — By some estimates, Maine is losing nearly $130 million a year in sales tax revenue to Internet transactions. Congress is considering legislation that would allow states to require collection of the sales and use taxes. It's an issue on which Maine's Congressional delegation is divided.

Maine Gov. Paul LePage has joined with other governors in urging passage of legislation in Congress requiring retail sellers in the U.S. to collect sales taxes due on goods and products shipped to states, such as Maine, that have a sales tax. Chellie Pingree, Democratic U.S. representative for Maine's 1st District, supports the legislation.

"Many of our Main Street businesses have lost sales to Internet sales, and I think it is how people are changing their purchasing patterns," she says, "So the idea that we are not showing sales taxes in states on Internet sales is just a huge revenue loss for a state like ours."

Independent U.S. Sen. Angus King also supports the change. He says the state was losing revenue on Internet sales when he was governor in the 1990s, and since then, he says, the problem has grown significantly.

"Even if you buy something online in states that have sales taxes, which I think is 46, you still owe the tax but it is not generally collected, it's called a use tax," King says. "Again, this is a leveling of the playing field between local merchants and online merchants."

But Republican 2nd District U.S. Rep. Bruce Poliquin opposes the idea, because he says it would impose a burden on Maine's own retailers to collect sales taxes on behalf of other states and at varying rates. And he acknowledges that he is alone among Maine’s top elected officials, including fellow Republican LePage, in taking a position against the legislation.

"This is one of the areas where I disagree with the governor," Poliquin says. "I don't want to turn our small businesses and individuals that are running businesses out of their kitchens or their dens or their basements or garages to be tax collectors for 49 other states. I think this would be very difficult to do."

But Republican U.S. Sen. Susan Collins says some Maine businesses are already collecting sales taxes for other states and for most, collecting the tax would simply be a matter of changing computer programming. And she says Poliquin's concerns about very small businesses and individuals are addressed in the legislation.

"The one exception that I do think should be made and is included in the bill at my insistence, is an exception for very small, home-based businesses," Collins says.

She says the issue is on the agenda for GOP leaders in both the House and Senate this year. She says it could pass as a separate bill or could be part of the broader tax reform legislation that has been promised by leaders.

Journalist Mal Leary spearheads Maine Public's news coverage of politics and government and is based at the State House.