(Reuters) – A measure to empower U.S. states to require out-of-state retailers to collect online sales tax cleared a legislative hurdle in the Senate on Monday, after earlier winning official backing from President Barack Obama.
Seventy-four senators voted to limit debate and move forward with a final vote on the proposed legislation in the Democratic-controlled Senate, likely on Wednesday.
“You have businesses all around America on Main Streets and shopping malls collecting sales tax on the things that they sell, competing with Internet retailers who do not,” said Democratic co-sponsor Senator Richard Durbin.
Supporters of the measure include brick-and-mortar retailers such as Wal-Mart Stores Inc and Best Buy Co Inc and cash-strapped state governments, along with Amazon.com Inc, which hopes to simplify its U.S. state retail tax situation. Opponents include many online merchants, including eBay Inc and Overstock.com Inc.
Prospects for the bipartisan measure are murkier in the Republican-controlled House of Representatives, where some Republicans view it as a tax increase.
Lobbyists on both sides are working to make their case in Congress. Several new wrinkles emerged on Monday, a key one being that the Obama administration for the first time officially backed the measure.
White House spokesman Jay Carney said the bill “will level the playing field for local small business retailers who are undercut every day by out-of-state on-line companies.”
Amazon, with its extensive network of distribution centers, already collects tax in nine states, and has agreements with seven more states to start charging in the next year. Amazon has been actively supporting the bill on Capitol Hill.
The bipartisan National Governors Association supports the tax, and in a letter to lawmakers on Monday said the disparate treatment of online and Main Street businesses is “shuttering stores and undermining state budgets.”
For its part, eBay’s chief executive launched a major lobbying blitz this week, pleading with its millions of users to oppose the effort.
WALL STREET WEIGHS IN
