Congress appears to be on its way to finally bringing sales tax equity to Main Street America.
The U.S. Senate this week moved forward in considering legislation to empower states to require online retailers to collect state and local sales taxes for Internet purchases.
Currently, states can require stores to collect sales taxes only if that store has a physical presence in the state. This gives Internet merchants an 8.9 percent price advantage over brick-and-mortar retailers competing for the business of Walla Wallans and other Washingtonians.
The playing field should be level. In addition, the additional sales tax from Internet sales will help local governments as well as the state government.
The arguments against this plan are rooted in the self interest of Internet retailers. They contend the requirement to collect sales taxes would mean complicate regulations on retailers and doesn’t have enough protections for small businesses.
The people selling clothing or televisions or office supplies on Walla Walla’s Main Street have been collecting sales taxes for years without too much trouble. Besides, the proposal in the Senate exempts Internet businesses with less than $1 million a year in online sales.
“While local, community-based stores and shops compete for customers on many levels, including service and selection, they cannot compete on sales tax,” said Matthew Shay, president and CEO of the National Retail Federation. “Congress needs to address this disparity.”
That’s what folks in Washington state (those who own retail businesses) have been saying for years. Even those with an Internet presence as well as a store have been irked as their Internet division has had to collect taxes from Washington residents making their Internet products 8.9 percent higher.
We hope Congress takes action on this issue to ensure the brick-and-mortar merchants in Washington and every other state that has a sales tax will not be at a disadvantage when competing with cybermerchants.