Most of us would probably say that we want to see the downtowns and small businesses in our communities thrive. They provide jobs. They provide goods and services we need. And it’s enjoyable to buy something from someone you become familiar with, an exchange that adds to our sense of community.
In practice, our actions sometimes differ from those values when we game the system a little to save a few bucks by going to a local shop, picking out what we like, even trying it on for size, then going home and ordering it online, often getting a break on the sales tax at the same time.
The practice is called showrooming; shoppers use the local business as a showroom, taking advantage of a local business that has stocked a product but not supporting it with patronage.
Some shoppers will always prefer online retailers to brick-and-motar stores, but Congress is again considering legislation that would level the showroom floor by making sure that the sales tax that all customers already owe for online purchases — but often is not charged — is collected and distributed to the state and local governments for which the tax was intended.
The Marketplace Fairness Act would authorize states to require that online retailers collect sales tax on items, then remit the revenue to the state for distribution to local governments. It doesn’t create a new tax; this is the same sales tax that we already pay at stores and local businesses. But it would end the unfair advantage that online retailers often have in not having to collect the tax from their customers.
At the moment there are three bills in Congress under consideration, U.S. Rep. Suzan DelBene, D-Wash., said last week. While supportive of the act itself, DelBene, who served as director of the state Department of Revenue before winning election in 2012, said the two bills in the House are flawed. She prefers a Senate version that would base the tax on where the customer lives, assessing the same tax rate that a customer pays at any business in his or her hometown. An exception would be made for small businesses that do less than $1 million in gross receipts. In a compromise, the Senate bill is likely to be joined with another bill that would prohibit state and local governments from assessing a tax on the services of Internet providers.
The Marketplace Fairness Act has bipartisan support as well as support from small businesses and in particular from one very large and influential online retailer.
“Amazon is a strong supporter. And a lot of retailers, online and brick-and-mortar are very supportive and want to see an equal playing field, see businesses treated the same,” DelBene said.
Amazon initially resisted, but since 2013 has supported the act because it will simplify and standardize sales tax collection for itself and end some of the costly maneuvering it has used to avoid the tax.
Beyond ending one unfair advantage that online retailers have over local shops, the act would also increase badly needed revenue for cities, counties, some smaller taxing districts and the state.
And if it encourages a few people to shop locally more often, all the better.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
