It was the last straw. For years, an area-based business owner had managed to deal with the stressful and potentially punitive sales tax collection requirements of the state, but a fiscally foolish decision by the governor and this year’s state legislature finally pushed him into a decision that will prove very costly to the state.
For years, Oklahoma policy makers have pushed hard to ensure compliance with the state’s sales tax code by passing an array of mandates on business. This places small businesses in a difficult position as they struggle to meet the many sales tax requirements.
Worse, if they make a mistake in estimating the amount of their submission, they risk being assessed penalties.
This creates a costly burden — especially for those businesses which customarily do monthly accounting and who have to pay the cost of complying with the twice-monthly submissions.
Until this year, Oklahoma government has recognized the principle of “reasonable compensation” to sales tax vendors. Businesses are collecting taxes on behalf of the state and there is a financial burden to this activity. The state reimbursed the businesses for their cost by allowing them to receive an amount equal to 1% of the sales tax collections — provided the business submits their returns on time.
That all changed this year. Greedy, money-hungry state officials passed legislation to do away with reasonable compensation. Now there is no compensation and these businesses are working for free. Although they collect taxes for state government, the state will no longer compensate for their cost.
This has put the state in the less-than-optimal position of giving away its carrot: an inducement to the vendors to pay on time. Now the state only has the stick: punitive fines and fees for late payment.
For the previously referenced small businessman, this represented the last straw. Weary of dealing with the state of Oklahoma, the business owner made the decision to limit his Oklahoma-based business activities to just those products that are exempt from taxation.
The governor and legislature will no longer have to worry about reasonable compensation to this business owner because he will no longer be collecting taxes for the state.
In this particular case and many others like it, the state’s money grab will be futile. The state will get to keep its 1% compensation to this vendor but they will lose all the revenues that the vendor would have collected. In trying to keep 1%, the state will lose much more.
That will actually turn into a bigger problem because policy makers spent 12 million dollars in their last budget with the expectation that keeping the 1% would give them 12 million new dollars to spend.
I don’t think they took into account the business owners who would see this as the last straw and simply stop collecting taxes for the state.
This is just one more example of another anti-business policy by Oklahoma’s money-grabbing politicians who are far removed from reality and the real world consequences that are haunting their bad decisions.