NASHVILLE - Gov. Bill Haslam today urged a congressional committee to pass legislation requiring sales-tax collections by out-of-state online retailers with no physical presence in states.

"Let me be clear," Haslam told U.S. House Judiciary Committee members this morning. "I am a Republican governor that does not believe in increasing taxes."

But, he said, "this discussion isn't about raising taxes or adding new taxes. This is about states having the flexibility and authority to collect taxes that are already owed by their own in-state residents."

He also called it "an issue of fairness" involving online retailers and brick-and-mortar businesses.

"Comparable businesses that sell the same things are not being treated the same," Haslam said. "Most people I talk to understand that and agree that isn't fair."

Traditional businesses with a physical presence in a state can be required by states to collect state and local sales taxes from customers.

The House Judiciary Committee is considering the Tax Equity Act, which addresses a two-decade-old U.S. Supreme Court decision on catalogue sales. The court held states can collect sales tax from out-of-state sellers only if the seller has a store that's physically located within their borders.

With the rise of the Internet, states and traditional retailers say the ruling, which the court left to Congress to address, is creating a government-imposed advantage for online retailers, which don't have to collect taxes that they are compelled to collect.

The tax is owed and is supposed to be paid by consumers but rarely is, officials say.

States say they are losing billions annually because of the current "loophole." In response to questions, Haslam said he would "probably" use some of the estimated $400 million in Tennessee sales taxes that currently go uncollected annually to reduce other taxes.

For complete details, see tomorrow's Times Free Press.