In a 69-27 vote, the Senate on Monday passed its Internet sales tax bill.
The bill now moves to the House, where it faces a tougher road to passage.
Conservatives and Republicans are split on the issue. Rep. Paul Ryan (R-WI) has expressed support for the “concept” of an Internet tax because he believes it will help level the playing field for brick-and-mortar businesses. Others, like Sen. Ted Cruz (R-TX), believe taxing online sales grows government and creates a dizzying array of complex regulatory requirements that smaller online retailers cannot afford.
Some limited government organizations like Americans For Tax Reform and FreedomWorks have jumped into the debate to help mobilize opposition to an Internet sales tax.
“This is a real test of basic principles,” said FreedomWorks President Matt Kibbe. “You’re not just talking about providing more revenue to big government, you’re talking about creating a new infrastructure to expand the general powers of government. I do think you will see a lot of grass-roots organizations focus on this, and it absolutely will have political implications.”
Americans for Tax Reform, led by Grover Norquist, has set up an online campaign to oppose the Internet tax.
Retail giants Amazon.com, Best Buy, and Walmart are pouring money into lobbying efforts designed to pass the law. Opponents of the legislation say big online retailers want the bill to pass to crush smaller competitors who cannot readily absorb the compliance costs involved in collecting sales taxes for 9,600 state and local taxing authorities.
Other big online players like eBay and OverStock.com are fighting against the Internet tax.
All signs indicate the bill will face a tougher fight in the House of Representatives. Presently, the House has not even put the bill on its legislative calendar.