Sales tax “shouldn’t become a wedge that favors some retailers over others”

This terrific article by St. Louis Post-Dispatch columnist Bill Nicklaus offers a great summary of the debate over online sales tax and explores where the debate may go in the future.

We found this section particularly interesting:

Convenience and selection are the biggest reasons for the growth of e-commerce, but the tax-free shopping environment doesn’t hurt. One study, done by two Georgia State University professors in 2003, estimated that collecting sales taxes would reduce online purchases by 6 percent.

If that’s accurate, then traditional retailers are already losing some business because of the disparate tax treatment. They’ll lose more as e-commerce continues to grow.

It’s great to see a study confirm what we’ve long known from anecdotal evidence: although most consumers shop online for convenience and selection, some consumers shop online specifically to avoid paying sales tax, which means those are sales that would otherwise go to local retailers.

Among the other hot topics Nicklaus covers are Illinois’ recent enactment of affiliate nexus legislation and the $269 million bill that Texas recently sent to Amazon for uncollected sales tax.

Nicklaus notes that Senator Dick Durbin (D-IL) is about to introduce the Main Street Fairness Act in Congress because “he wants a federal version of Illinois’ Amazon tax, making it harder for online firms to play one state against another.” (A quick note of clarification: The column mentions that Illinois’ new tax law is called the Main Street Fairness Act. The federal legislation is also called the Main Street Fairness Act, but unlike Illinois’ law, it would allow all states to require online retailers to collect sales tax.)

Nicklaus closes with a strong endorsement of federal legislation and an equally strong condemnation of Amazon’s tactics: “The sales tax has long been viewed as an efficient and fair way of raising government revenue. It shouldn’t become a wedge that favors some retailers over others. If states can’t stand up to Amazon on their own, then Congress must find a way to end the bullying.” (emphasis added)

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