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Updated Mar 11, 2014 - 4:24 pm

Arizona House rejects online tax bill for 2nd time

PHOENIX — The Arizona House of Representatives has for the second time
voted down a bill that would have reduced income taxes to offset new collections
from online sales.

House Bill 2465, introduced by Republican Rep. J.D. Mesnard of Chandler, would
require state tax authorities to determine how much in new sales taxes were
collected in online sales in the first year and reduce the following year’s
income tax rate by the same amount. Estimates of revenue from Internet sales tax
vary from $100 million to more than $700 million in additional state and local
sales tax dollars per year.

People who purchase items online now owe state sales taxes, but there’s no way
for the state to enforce that requirement. Part of an overhaul of the state’s
business sales tax collection system last year would allow Arizona to collect
those taxes if the U.S. Congress passes the Marketplace Fairness Act. The
proposal has passed the senate but awaits action in the U.S. House.

Mesnard said collecting taxes on internet sales is essentially a new tax
because it has never been enforced. Democrats argue that doing those collections
is just closing a loophole.

Mesnard said taxpayers already pay enough. He implored legislators who had
voted against his bill to reconsider.

“I think most of our constituents will be outraged,” he said.

Rep. Ethan Orr, R-Tucson, said he wasn’t comfortable voting for a bill that
would offset taxes that are not collected yet.

The House voted against the measure 30-28 on Tuesday.

Legislators also voted for the second time on a Republican bill that would
allow Arizona cities and towns to enter restricted federal land without
permission in emergencies.

This time around, members approved House Bill 2541 after voting it down last
week. They passed the bill by Rep. Kelly Townsend, R-Mesa, with a 35-23 vote.

Townsend says she was inspired by the battle between the city of Tombstone and
the federal government over access to repair its water supply system in the
Coronado National Forest. She says local authorities should have the right to go
in where needed without being granted approval first in cases of emergency.

The bill lost support last week because House attorneys said it was in conflict
with federal law and likely unconstitutional.

Rep. Bob Robson, R-Chandler, voted against the bill last week but in favor of
it this week. He said he changed his vote because Townsend assured him she would
rework language in the bill to address concerns over constitutionality.


Associated Press reporter Bob Christie contributed to this report.


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