Three weeks after adoption in Connecticut, Texas Gov. Rick Perry has vetoed a measure that would have expanded the number of Internet retailers required to collect Texas’ sales tax, The Associated Press reports.
The bill would have required companies that contract with marketing companies inside Texas to collect the state’s sales tax. Federal law requires companies with a physical presence inside a state to collect that state’s sales tax and the bill would have expanded the definition to include contractual agreements.
Big retailers like Amazon.com had threatened to cut off all relationships with marketers inside Texas if the bill became law.
In Connecticut, Overstock.com and a dozen other online retailers cancelled their ad contracts with affiliate marketers in the state as a result of the new tax state lawmakers passed as part of the two-year budget agreement.
Advocates said the bill would have brought in hundreds of millions of dollars in new state revenue, while opponents said it would add nothing to state coffers and shut down dozens of small businesses.
Texas store owners have complained that Internet retailers have an unfair price advantage because they are not required to collect state sales tax. But Perry said he was afraid this bill would have unintended consequences.
The Alliance for Main Street Fairness, a group advocating for the law, said it hoped the measure might survive in other legislation now under consideration in a special session to balance the state budget.
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