By Dennis Seid/NEMS Daily Journal
On almost everything we buy – unless you happen to be a nonprofit group of some kind – you’re going to pay sales tax.
Whether it’s a pair of shoes or a plate of sushi, expect to add a little bit to the bottom line.
And if you’re a retailer, it’s a part of doing business. You collect the tax, you push along the tax.
So what if a competitor starts selling the same items you do, except doesn’t charge a tax?
Is it a savvy competitive move or is it purposely underselling you to grab your customer?
And would you, as a consumer, care if that competitor was a store nearby or a “store” online?
There is bipartisan legislation – a rarity these days – in Washington that would force online retailers to collect sales tax.
According to the Retail Industry Leaders Association, the Marketplace Fairness Act, “would give all retailers the opportunity to compete on a level playing field, ending the artificial competitive advantage online-only retailers have enjoyed for too long.”
“All retailers are asking for is the chance to compete on price in a true free market,” said Katherine Lugar, RILA’s executive vice president for public affairs. “We need government to take its thumb off the scale and end special treatment for online-only sellers who, unlike retailers on Main Street, currently avoid collecting sales tax.
“Retailing is arguably the most competitive industry in our economy, with profit margins often in the low single digits. By giving out-of-state sellers preferential treatment in the tax code, Congress is picking winners and losers – with the losers being local communities, storefronts and jobs.
The National Retail Federation also supports the legislation. Believe it or not, Amazon.com is behind it, too, but most other Internet-only retailers are opposed.
The Supreme Court in 1992 said out-of-state retailers can only be required to collect sales tax if they have a store or other physical presence in the customer’s state. The court said the myriad of local sales tax rules would be too complicated for out-of-state retailers to know what to collect.
Federal legislation would create “an even-handed national framework for sales tax collection,” Paul Misener, vice president for global public policy at Amazon, the largest U.S. online retailer, told the Senate Commerce Committee.
But NetChoice, a group whose allies include eBay, Oracle and Facebook, said Amazon and big-box chains would benefit, putting undue burden on smaller online-only companies.
However, opponents, such as South Carolina Sen. Jim DeMint, said the bill is “a mandate on business.”
I don’t suppose Sen. DeMint runs his own store and has to compete with online retailers. If he did, he might change his tune. That’s right – he founded The DeMint Group, a research firm in his native state. So he’s not at the grass-roots level fighting against online competition.
We know Northeast Mississippi retailers that fight that fight every day. They offer unparalleled service, but are undercut by an online retailer that doesn’t have the same overhead costs – including sales tax – they have to pay.
Opponents say it’s a clear example of taxation without representation. Talk to a local small business owner. He or she would likely disagree.
Dennis Seid is the business editor at the Daily Journal. Reach him at (662) 678-1578 or email@example.com.