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Taxing online sales is a bad idea

I heard a rumor today that made me cringe. Rumors usually have a sliver of truth but I hope this one doesn’t. Apparently, the idea of collecting sales taxes from Internet businesses in Idaho is still alive in the Idaho state Legislature. This is a bad idea for several reasons.

First, let’s consider the rationale. The thought is that charging sales tax on Internet businesses will “level the playing field” for non-Internet companies. That’s ridiculous.

I suppose that in the 1920s when the automobile starting infringing on the sales of saddles, horseshoes and buggy whips we could have leveled the playing field by charging a tax on all automobile sales that subsidized tack shops and blacksmiths. Or we could have legislated that each new car must come with a buggy whip to keep the buggy whip industry alive. But, that would be just as ridiculous.

Second, companies that cry foul because they do not do business online should consider stepping into 2012 and stop running their business like it is 1980. Today, would a florist only sell flowers they get from local growers?  Or rely solely on local sales? Not if they want to stay in business. They buy flowers from growers all over the world. Florists receive orders from national companies that drive sales from of all places, the Internet. The flower business has evolved from the little shop down the street to an international co-op. I suppose we should tax them for morphing the flower industry, changing their business model and providing better service and better products more efficiently than before.

Third, the Internet has fundamentally changed the way we do business. It’s easier, more convenient, provides a huge selection and delivers to your doorstep. This new sales channel can move quickly and adapts well to shifting economies. These companies can literally reach around the world, expanding their customer base and increasing revenue.  We can accept that and create better businesses, or we can try to stifle the innovation to our own demise.

Fourth, the taxing of online businesses should not be done state by state. Legislation at the federal level is already being reviewed to pass sales tax laws that cover every business the same way nationally. State by state sales tax laws make it more difficult and costly for online businesses to do business. Is that a level playing field?

Idaho shouldn’t do anything that would slow this new economy, especially in our own backyard. It should be encouraged, celebrated and welcomed. If anything, the state should be helping small businesses become part of the new economy, not putting roadblocks in the way.

I think a better idea for all Idahoans is to provide resources, classes, training and inspiration to advance every business in the state to become an online competitor. That doesn’t mean giving up their brick and mortar presence, only that they expand their thinking and their sales by joining the Internet community. That same flower shop could develop a Twitter following to share daily deals and special reminders about birthdays, anniversaries, graduations, etc., that increase their exposure, brand and, of course, sales.

There are several good, reputable companies online such as BigCommerce, Magento, Shopify, and Volusion to name a few, that specialize in helping people, even Internet novices, set up and establish an online business. The cost is extremely reasonable, often under $100 a month.

There’s a public service advertisement currently running that encourages students to take the “Go On” pledge, a campaign to get kids to commit to “go on” to college and continue their education. I have an idea for another public service advertisement aimed at businesses that are hesitant to moving to the Internet. It’s called, “Go Online.” Let’s get the state, the chambers of commerce and local universities to promote the movement online and stop trying to maintain the status quo.

It doesn’t surprise me that some legislators support the movement to charge Internet companies sales tax but it surprises me that Idaho would even consider the matter. But like I said, it’s just a rumor.

Don Bush is director of marketing at Kount, a leading provider of fraud prevention technology. Prior to joining Kount, Don was marketing director at CradlePoint, a manufacturer of wireless routing solutions in the mobile broadband industry. Don has worked in hardware and software management for more than 20 years and as a partner in two top technology marketing agencies.

About Don Bush