With all the brouhaha in Washington, D.C., over immigration, gun control and sequestration, there is a move afoot to tax Internet sales that is sliding by almost unnoticed. It is not going unnoticed in the halls of Congress, and it is finding an unusual band of bipartisan supporters.
In spite of opposition to the Marketplace Fairness Act by anti-tax heavyweights Grover Norquist and Americans for Tax Reform and the Heritage Foundation, many Republicans are bucking their influence. Presently, states can only tax sales of retailers who have a physical presence in the state. The bill would require all Internet retailers to collect taxes and remit those taxes back to the states. Norquist was quoted in The New York Times as saying the Internet tax proposal is a “very bad idea.” Still, the Senate voted 63-30 to end debate and has scheduled a vote on the bill for Monday. If it passes, it will head to the House.
Rep. Austin Scott, R-Ga., said of the opposition groups, “We respect their opinion ... but the fact of the matter is, in the end, we have a job to do.”
Presidents Bill Clinton and George W. Bush opposed a tax on Internet sales, while President Obama supports this bill and for good reason. While you could say the Internet was a fledgling sales platform in 2001 when Bush signed the tax moratorium and Internet sales totaled only $36.4 billion, that cannot be said today. The Internet marketplace has changed dramatically putting brick-and-mortar retailers at risk. Some customers use the brick-and-mortar retailers as showrooms where they get the touch and feel of merchandise but then order it online.
According to Statista, retail shopping websites “earned $186.2 billion in 2012. Forecasters expect that to increase to $361.9 billion by 2016. Consumers spent $1.47 billion during last year’s Cyber Monday.
Opposition from online retailers has been fierce with eBay leading the pack, but retailing heavyweights such as Amazon, WalMart and Target support the bill.
While there are many reasons stated by the opposition, from the measure being a tax increase to having taxes paid by people out of state to creating a bureaucratic nightmare, it really comes down to an issue of fairness.
Online retailers can offer lower prices because they don’t have to invest in local storefronts, but those storefronts support education, police and fire protection and create jobs that contribute to the local economy.
It is an idea whose time has come. While we all love getting a deal and Internet shopping is a breeze, the Internet is mature enough now where all retailers should be held to the same requirements and play on the same level field.