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Virginia Senate Candidates Split on Internet Sales Tax Virginia Senate Candidates Split on Internet Sales Tax

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Virginia Senate Candidates Split on Internet Sales Tax

If the tightly contested race for the Virginia Senate comes down to the votes of online shoppers, the Republican side could find themselves chalking up a win.

Democratic candidate former governor Tim Kaine, speaking at a forum on technology issues held Thursday by the Northern Virginia Technology Council, signaled support for efforts to extend the collection of state sales taxes on Internet sales, potentially even to companies that don't maintain a physical presence in the state. "I'm not familiar with the particulars of legislation that is pending right now, but I do think that long term, we've got to find some strategy that would produce more equity among bricks-and-mortars sellers and those who sell the same goods" online, he said.

Current law requires online merchants to collect and remit sales taxes to state governments only when they have physical operations in that state. Online retailers and catalog merchants are not required to collect sales taxes on transactions involving out-of-state customers.

Kaine is looking to equalize the burdens of online and offline merchants. He pitched it as a "fundamental fairness issue," saying that bricks-and-mortar stores are being hampered in their efforts to compete with online retailers. He held out the possibility of exemptions for small sellers, to spare them the burden of complying with the dizzying array of state and local tax codes.

Republican former Governor George Allen, who is looking to reclaim his old Senate seat, disagreed. Speaking at the same event, Allen made the case that businesses that don't derive benefits from operating within a state should not be compelled to pay sales taxes to that state. "It would be very burdensome, particularly for small businesses, to comply," Allen said. He raised the specter of "Maryland auditors coming in" to examine the sales records of Virginia businesses.

There was daylight between the two on some other issues that are important to companies in Northern Virginia's thriving technology corridor.

Allen backed a moratorium on "insourcing," the practice of returning to federal workers job functions that had been outsourced to private contractors. Kaine said he appreciated the concerns of contractors that the cost analysis used in making insourcing decisions didn't take pension obligations and other government costs into account, but he did not commit to a moratorium.

On immigration, Kaine declared his support of the Dream Act, and offered a path to legal status for undocumented aliens in the U.S., through the payment of fines. While Allen didn't wade into any of these more controversial positions, he did have a plan to help technology companies who were looking to fill high-skill jobs. Talking about foreign students graduating from American universities with science and engineering degrees, Allen said, "If they have a job waiting for them, attach a green card to their diploma."

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