Local businesses have a hard time competing with online retailers, and not all of that competition is fair.
Online companies like Amazon have built-in advantages that come with high volumes and can negotiate better prices with wholesale suppliers. But they also don’t have to collect sales tax in states in which they don’t have a physical presence, giving them an unfair price advantage over their brick-and-mortar competitors.
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This is wrong on many levels. It hurts local businesses, their employees and the vendors who serve them, taking money out of the local economy. It hurts the state, which misses out on tax collections that would be used to pay for schools, roads and care for the elderly and disabled.
And it turns otherwise honest people into tax cheats if they don’t keep track of their online purchases every year and voluntarily pay what they owe to the state at tax time.
Several states have attempted to address this problem though the courts, but they have not been able to enforce their sales tax collections from online businesses that don’t have a physical presence within their borders.
This could be fixed with a federal law, but after a decade of debate, Congress has failed to act. The debate should end. States are suffering from lost revenue, and local businesses are losing sales that should be theirs while Congress studies the issue. And with Internet commerce growing, all of these problems are just going to get worse.
The Marketplace Fairness Act will bring much-needed money to state coffers without raising taxes – it will only collect taxes. The software for online retailers to collect different rates of sales tax from the different states that require it already has been developed, and the costs to implement this program would be minimal. Small retailers, with online sales below $500,000, would be exempted from the requirement, so the law would not be an impediment to innovation and startups.
It makes sense to level what has been an unlevel playing field for some time. Maine’s congressional delegation should support this reasonable reform.
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