Retailers Push for Online Sales Tax

Many retailers are pressuring Congress to enact legislation that would impose an online sales tax.

Retailers and retail advocacy groups are attempting to use the enormous online consumption of “Cyber Monday”, the Monday after Thanksgiving when many online shops offer deep discounts to consumers, to bolster their argument.

Alison Joseph, a spokeswoman for the Alliance for Main Street Fairness, said:

This should be the last holiday shopping season that Main Street businesses have to compete on a playing field that is not level. Cyber Monday is just another opportunity for out-of-state, online-only retailers to exploit a government-sanctioned loophole that puts local businesses at a significant disadvantage over brick-and-mortar retailers,” she added.

Currently, states can only collect sales taxes from retailers that are located in their state.

Last year, consumers spent about $1.25 billion online on Cyber Monday.

Sens. Dick Durbin (D-IL), Mike Enzi (R-WY) and Lamar Alexander (R-TN) have authored the Marketplace Fairness Act, which would empower states to collect taxes on online purchases. Businesses that earn less than $500,000 annually in out-of-state sales would be exempted. 

Some Republican governors support the bill, like Chris Christie of New Jersey, Mitch Daniels of Indiana, and Rick Snyder of Michigan. Amazon.com, which has started to place outlets in more states, backs the bill.

Sen. Jim DeMint (R-SC), on the other hand, strongly opposes it; he feels it is dangerous legislation, calling it a “federal decree disadvantaging Internet companies by forcing them to collect sales taxes not only according to their state and locality, but across all 50 states and thousands of local tax jurisdictions.” 

DeMint is joined by eBay, whose top lobbyist, Brian Bieron, has warned that an online sales tax would “harm many thousands of entrepreneurial small business retailers who use the Internet to stimulate economic growth, serve consumers and create jobs across America.”