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E-Fairness is good for Idaho retailers

Shopping online is a simple and convenient way to make purchases. The Idaho Retailers Association fully supports online shopping, and we encourage all our members to develop an online presence to compete in today’s marketplace. What we do not support is the unfair advantage some out-of-state online retailers have over local businesses by not being required to collect sales tax.

Idaho, like most states, requires sales tax be paid on online purchases. But a court decision made years before the e-commerce boom created an unfair standard of tax laws, granting a special advantage to online retailers: they are not required to collect the sales taxes that brick-and-mortar retailers do. Citizens are supposed to pay these taxes proactively, but most people don’t even know that they are supposed to.

What this means is that Idaho’s traditional retailers face competition online from merchants who can create the appearance of cheaper prices by not including sales taxes in the final price. Idaho retailers are losing customers, money—and sometimes their shirts. It’s time to put an end to this biased tax regimen and level the playing field in the retail marketplace.

This is an issue that has sparked a great debate on Capitol Hill. Congress is considering a bill to give states the power to collect sales taxes online. This bipartisan legislation, called the Marketplace Fairness Act, is bringing together conservative Republicans, middle-of-the-road Independents, and liberal Democrats—the U.S. Senate stands poised to pass it on May 6.

If passed by the House as well and signed into law, it would be a significant victory for local retailers, for the communities where they reside and work, and for fairness. It would also have significant positive results for the state. According to the National Conference of State Legislatures, Idaho had $103.1 million in uncollected sales tax revenue in 2012 because of purchases made online. These funds can and should be going toward tax relief for citizens, and education, transportation, and infrastructure.

The Marketplace Fairness Act is not a new tax. It simply would allow individual states to require online vendors to collect and remit the sales tax owed for online purchases like traditional retailers have been doing for decades. These taxes are already due; they are just going uncollected. The Marketplace Fairness Act would level the playing field for the kinds of businesses that line our city streets, employ our neighbors, and invest in our communities.

Idaho Camera is a great example of a business that knows first-hand how the status quo hurts local companies. Potential customers use the staff’s expertise to learn about products before leaving the store to buy online from a “cheaper,” out-of-state vendor. Consider a customer purchasing a $1,000 camera—with a 6% sales tax, they can pay $60 less online. This is a massive, government-mandated pricing advantage.

The Marketplace Fairness Act has been crafted to protect small online entrepreneurs, including a $1 million annual exemption. Roughly 99% of sellers who sell goods through eBay will not be affected by this legislation at all. For the remaining 1%, technology exists to collect state sales taxes, including software to help calculate the taxes owed to each jurisdiction.

It is time to “Stand with Main Street” and restore fairness to all retailers, whether they sell online or in our communities. Idaho’s local businesses are suffering due to out-of-state, online-only retailers who have been able to avoid collecting state sales tax. This legislation includes no new taxes or government spending. It simply returns each state the power to enforce its own tax laws and requires everyone to play by the same rules in our free market system.

The Idaho Retailers Association is asking that our Idaho delegation join in supporting the establishments that make up and invest in our communities. We are asking that Congress end special treatment for online and out-of-state sales. All businesses must be given the chance to succeed and grow. We exist in a 21st century marketplace, and the law must reflect this reality.

Even Amazon.com and other online companies have joined the fight for a freer, fairer, and simpler marketplace. It’s time for Congress to act by passing the Marketplace Fairness Act.

Pam Eaton is the president and CEO of the Idaho Retailers Association.  To find out more about the Marketplace Fairness Act, visit www.standwithmainstreet.com

About Pam Eaton

One comment

  1. While I can appreciate the point made by Pam Eaton, I do have to disagree with her view of the Market Place Fairness Act. This law is nothing more than a cash grab by government and if you’re a retailer battling in today’s ultra competitive market place, nothing sounds better than sicking an 800lb gorilla (IRS) on your online competitors. This law would limit the competitive advantage of Idaho based online businesses, and would hamper entrepreneurial endeavors focused on the online market place. The exemptions for smaller retailers is only a “feel good” provision and would actually make the idea of growing your small business seem foolish and counter productive.

    As for the example of Idaho Camera, I’m sure that business would love to see its competitors taxed more… is that really going to help them? They would still face increased competition from places like Best Buy, Walmart etc… Do the people that take the time to visit an Idaho Camera retail store purchase there because of price or is it because of service and product knowledge of its sales associates? We all know you don’t get that at a Best Buy or Walmart. I would argue that buyers that buy based on price will never even visit and Idaho Camera. Those buyers are the one’s shopping online and this law won’t fix that.

    The last thing we need is the Federal Government getting involved in this issue. It will hurt small business and will eliminate advantages that our state has created via reasonable taxation policies. The law will not make local retailers more competitive, it will simply make them shift blame to the big box stores or whatever comes next.