Bricks-and-mortar retailers have become the first US business group to be disappointed by Republicans since their midterm election gains, as party leaders indicated that a bill to end tax-free internet shopping was doomed.
Retailers such as Walmart, Target and Best Buy have long railed against a perceived loophole that they say gives ecommerce rivals an unfair advantage by enabling many online shoppers to avoid sales tax.
But on Monday a spokesman for John Boehner, the Republican speaker of the House of Representatives, said a bill to tax online shopping – which passed in the Senate last year – would not move forward in the final weeks of the current Congress, the lame duck session.
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The announcement is a blow to retailers which had calculated that the bill had a better chance of passing this year – with control split between Republicans and Democrats – than in a new Congress controlled by Republicans.
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Although the Republican party is close to business and has policy priorities that closely match those of the US's biggest companies, the internet sales tax is one area where retailers garner more support from Democrats.
Retailers say they want to create a "level playing field" where their online rivals bear the same sales taxes as bricks-and-mortar peers. Sales tax is collected at state and local level and generally falls in the range of 5 per cent to 10 per cent of a product's price.
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Many conservatives – who exert a powerful influence on House Republican leaders – have complained that the bill amounts to a new tax and would expand states' authority by enabling them to collect tax via online businesses in other jurisdictions.
A spokesman for Mr. Boehner said: "The Speaker has made clear in the past he has significant concerns about the bill and it won't move forward this year. The [House] judiciary committee continues to examine the measure and the broader issue."
For many years bricks-and-mortar stores have focused their anger on Amazon, whose rapid growth has done more than any other online retailer to undermine their businesses.
But the ecommerce giant had come onside as a supporter of the bill because it would have stopped states from singling it out as a target for tax collection.
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EBay and Overstock have led opposition to the bill from the internet sector.
Lobbyists for the retailers refused to throw in the towel, vowing to keep pushing the bill in this session. "Most Americans won't be taking the next two months off, and neither should Congress," said Jason Brewer of the Retail Industry Leaders Association.
In the Senate, a spokesman for Dick Durbin, a member of the Democratic leadership who helped pass the bill, said: "Our goal hasn't changed and the bipartisan group of senators and the coalition will continue to work to find a path forward for it."
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Retailers had hoped to attach the sales tax bill to a separate piece of legislation to extend a ban on the taxation of internet access – not internet sales – which both parties support.
Mr. Boehner's spokesman said: "The House and Senate should work together to extend the moratorium on internet taxation without further delay."
