A new article in Gulf Coast Business Review (FL) highlights small local retailers whose business is suffering because most of their online competitors don’t have to collect sales tax:
“The challenge we have is that people will come into our store and ask to be fitted for the right bat, and then go on the Internet and buy that product,” says [Sandy Fortin, owner of 28 franchises of sporting goods store Play It Again Sports in Florida], who’s also treasurer of the Florida Retail Federation. “We end up spending payroll and time with customers, and then they go spend it on the Internet.”
Purchases of goods via the Internet continue to grow, and it’s costly to Florida’s brick-and-mortar businesses, like Fortin’s. According to the U.S. Census Bureau, from 2007-2009 Internet sales grew 4.8%, while brick-and-mortar store sales sank 9.1%.
And because out-of-state business aren’t required to remit the state’s 6% sales tax or additional local option sales taxes that push the rate to as high as 7.5% in some counties, local businesses argue it puts them a disadvantage. . . .
“It definitely affects your sales,” [Fortin] notes. “We’re the ones creating the jobs. If we do more business in sports, we’re going to open more stores and hire more people.”
The article points out that the current sales tax system simply doesn’t reflect the realities of today’s marketplace:
“The problem is we have a retail marketplace that is changing,” explains Rick McAllister, president and CEO of the Florida Retail Federation. The organization is a big supporter of leveling the playing field along with other major business groups including the Florida Chamber of Commerce and Associated Industries of Florida. “It’s no longer brick and mortar,” observes McAllister, “the Internet is growing, growing, growing. We have a tax system that is not changing with a market system that is changing.”
The article also covers recently proposed Florida bills, Senate Bill 1548 by Senator Evelyn J. Lynn (R) and House Bill 455 by Representative Michelle Rehwinkel Vasilinda (D), that would have allowed Florida to join the Streamlined Sales and Use Tax Agreement (SSUTA). Interestingly enough, not long ago (April 26, 2011), the legislators organized a Main Street Fairness Day in Tallahassee, where we spoke alongside other Florida businesses in support of these proposed bills. Unfortunately, both of these bills died in committee when the legislative session ended on May 7. Hopefully Florida can finally get these important bills passed in their next session.
Once the federal Main Street Fairness Act is passed, states will be able to compel out-of-state retailers to collect their sales tax, but only if they make doing so easy for retailers by adopting and enacting SSUTA guidelines—otherwise, the burden of collecting sales tax is simply too great, and states will end up losing millions (or even billions) in uncollected sales tax.
It’s a well-written and balanced article, and we recommend you read the entire thing, particularly if you live or work in Florida.