Texas won big late last week when Amazon.com agreed to begin collecting sales taxes on online purchases made in the Lone Star State. The agreement takes effect July 1 for when Amazon.com begins collecting Texas’ 6.25 percent sales tax for online purchases.
Amazon.com, the biggest online retailer in the country, has been good at forcing states to agree not to require it to collect sales taxes on online purchase made by in-state residents if those states hope to get one of Amazon’s coveted distribution centers and the hundreds of jobs that go with them.
South Carolina lawmakers tried to bluff Amazon a year ago and ended up backing down when the online retail giant abruptly stopped work on a distribution center in Lexington County. Wisely South Carolina lawmakers changed their minds and pushed through what at that time seemed like a reasonable compromise with Amazon.
Texas tried a different approach. That state, where Amazon already had a warehouse, sent Amazon a bill last year for $269 million in uncollected sales tax. Amazon argued it didn’t owe the tax and shut down the warehouse, according to an Associated Press story.
In a change of heart last week, Amazon.com agreed to expand operations in Texas and start collecting the sales tax. In exchange, Texas decided to drop the past-due bill. “This is an important step in leveling the playing field in Texas,” that state’s comptroller, Susan Combs, was quoted by the AP as saying.
After her win, she added, “However, Congress should enact federal legislation that will give states access to revenues that are already due, which would resolve this issue fairly for all retailers and all states.”
Combs is absolutely correct.
It’s important to remember in this matter that the companies don’t pay the sales tax, they just collect it from their shoppers.
Companies such as Amazon that have avoided collecting the sales tax enjoy a built-in advantage over brick-and-mortar stores.
Amazon seems to be coming around on this issue as seen by its decision last week in Texas and by a lack of resistance to the concept of finding a national solution to the online sales tax issue. Amazon.com should not enjoy an advantage over companies that must collect the sales tax. Also, state and local governments throughout the country cannot afford to lose revenue that otherwise would be paid on those online sales.
Texas Comptroller Combs is but one strong voice urging Congress to solve this problem that is only going to get worse. Federal legislation is the answer.
The Greenville News, Greenville, S.C