Saturday, December 03, 2011
Blunt: Time to level the playing field for American businesses
In his weekly column, Sen. Roy Blunt advocates taxing online purchases:
With the holiday season upon us, Americans have officially kicked off their seasonal shopping and families are eagerly searching for the best bargains and discounts – including through online retailers.
Smart phones, tablets, laptops and other technologies make it simple and convenient for consumers to purchase their holiday wish lists with the click of a button. This week alone on Cyber Monday, online sales increased 15 percent from last year, with an expected gross revenue totaling $1 billion in sales. And according to IBM Benchmark, sales from mobile devices increased more than 7 percent.
While this bounce is a strong sign for our nation’s struggling economy, it also highlights a tax problem that has created a disadvantage for local Main Street job creators who are trying to compete with a booming online retail market.
Currently, online and catalog retailers do not collect sales taxes at the point of purchase – instead, states are forced to rely on consumers to pay those taxes after the fact. Meanwhile, brick-and-mortar businesses charging sales taxes are placed at a disadvantage, as more consumers look to the internet in search of better prices or prices that may be better only because you don’t pay the tax, but are legally “required” to pay it on your own.
Let’s face it: people often go to their neighborhood store to “try on” the wedding dress or look at the new power tools and then buy the same products online. If the major difference in the price was the sales tax – which the local merchant doesn’t keep – that’s not fair. A major media campaign in the last few weeks was “shop small.” The goal of this legislation is “shop fair.”
In order to close this loophole and create a fair environment for all retailers – both online and traditional – I recently joined a bipartisan group of Senators to introduce the Marketplace Fairness Act. This bill will allow states to collect sales taxes that they are already owed from out-of-state and online businesses in the way that works best for them – if they choose to collect these sales taxes at all. This bill also includes an exemption for online sellers who generate $500,000 or less in annual gross receipts.
To be clear, this bill does not create a new tax. It also does not tax consumers’ internet usage – which I strongly oppose.
Our number one priority in Washington must continue to be limiting onerous regulations and passing common sense policies that will jumpstart our nation’s economy and put Americans back to work. Retailers across the country already compete on price, and this bill has garnered support from both online and local business owners because it helps ensure that they are not forced to compete in an unfair environment under a tax policy that favors one type of seller over another.