One problem some Texas cities have with the Comptroller’s rule change is that it goes against their long-term business development plans. Hegar acknowledged the problem saying,“Early on a few cities voiced concern regarding the sourcing of local Internet sales tax…We have discovered that half-a-dozen to a dozen cities have entered into agreements with a business, whereby the business’s Internet orders are routed to that city and the city will rebate up to 75% of the local sales tax collected.”
Economist Ray Perryman says it’s very common for many cities in the economic development efforts to make these types of agreements in order to bring these commerce centers to their town. “The question becomes if a city has worked very hard to attract something, is it fair to take the tax money away from them? On the other hand, is it fair for the other cities who have for years had people walk in their local stores and buy things to lose the sales tax money.”
Hegar’s proposed rule change is still under review.