May 6, 2013

Online Sales Tax

A new bill working its way through Congress may mean higher taxes for online shopping.

Shelby: It happens at every store. People walk in, look around and leave empty-handed. But business owners like Leah Daniels say it is not because shoppers don’t like what they see, it is because of stiff competition from the internet.

Leah Daniels: People come in, they check them out, they feel the quality of them and sometimes they’ll actually tell me that they will go online and buy them because they don’t have to pay sales tax.

Shelby: Leah says her kitchen supply store in Washington is losing ground to internet retailers because shoppers don’t always have to pay sales tax online. But new legislation known as the Marketplace Fairness Act of 2013 could change that. Under the current law, online retailers do not have to charge you local sales tax unless they have a physical presence, like a store in your state. That means if you buy a pair of shoes from a site like Zappos, you might not pay as much as if you were buying the same pair of shoes from an actual store, like Foot Locker. But if the Marketplace Fairness Act is passed, all online retailers will have to charge state and local sales tax, even if they don’t have any physical stores at all.

The bill has support from retail giants like Amazon and Walmart, as well as Democrats and Republicans who say it is about leveling the playing field.

Senator Susan Collins: This bill is a matter of fairness.

Shelby: But some online companies, like eBay, are against the bill. Opponents say the law would swamp businesses with new requirements from faraway states.

Senator Ron Wyden: This bill coerces them to collect taxes for, in effect, thousands of jurisdictions around the country.

Shelby: States claim they lost out on $11 billion in revenue last year because they couldn’t tax internet sales. And large companies, like Best Buy, have had to cut jobs because more and more shoppers are coming in to test electronics, then going home to buy them online to skip the sales tax.

David French: Retailers have been looking for a solution to this problem for ten or fifteen years.

Shelby: In fact, one recent survey of about 2,500 online shoppers found that almost 30% of them say they will do more shopping at physical stores if the online tax becomes reality.

Shelby Holliday, Channel One News.


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