Republicans and Democrats are teaming up in Congress to support a bill, called the Marketplace Fairness Act, that would allow states to force online companies like Amazon and eBay to charge at least five-percent for sales tax. InternetRetailer.com says online shoppers spent about $202 billion in 2011 — a number that is expected to increase to a projected figure of $327 billion by the year 2016.
With more and more people shopping online, many “brick and mortar” companies (businesses that use actual building space) were at a disadvantage when compared to the online giants that didn’t charge a sales tax. This bill could level the playing field.
“NCSL supports the federal bill,” said Max Behlke, a policy specialist with the National Conference of State Legislatures. “We believe that $23 billion that would come in the fiscal year of 2012 alone would help states out when they are still recovering from recessions. Having these billions of dollars go back to states that could go to schools, teachers, fire departments, etc.”
Online businesses are forced to charge a sales tax when it has a nexus, or physical presence, in a state. For example: Amazon doesn’t have offices, warehouses or distribution centers in Florida, meaning shoppers from Florida won’t be charged a sales tax. States could pocket billions of dollars with the passing of this bill, which could help ease budget deficits in states like Florida.
“It definitely couldn’t hurt our sales any,” said Diane Ernst, the owner of Almost New Book Store, when asked about the impact the Marketplace Fairness act could have. “A lot of my customers will order books from Amazon if they can’t find books with me. If they have to pay sales tax and shipping, that’s going to be a good chunk of change.”
Local businesses could see a surge in business, though shoppers may still value the convenience of buying items from their own living room.
“Although some suggest these States have a ‘spending problem’ rather than a ‘revenue problem,’ it is important to recognize that these states have already been reducing their spending levels year-over-year,” says MarketplaceFairness.org, the website for this federal bill.
“This is money that’s owed to states and they should be able to collect it,” Behlke said. “It’s the right thing to do and they need to do it now.”