May 15, 2013
Will the Marketplace Fairness Act Hurt Online Sales?
It’s long been argued that online sellers have taken business from brick & mortar stores, including many mom and pops, because they could offer the same products to consumers without adding sales tax to the purchase price. This pricing advantage led retailers of all sizes to push for legislation to level the playing field. The result was the Marketplace Fairness Act, recently passed by the Senate and awaiting a vote in the House of Representatives.
Passage of the bill is far from assured as many Republicans and a few Democrats have expressed reservations about the legislation. The vast majority of retailers, including e-tail giant Amazon.com, support the legislation.
House Speaker John Boehner is among those opposed to the bill. Mr. Boehner told Bloomberg Television that complying with sales tax codes from around the country would be too difficult for retailers from a compliance perspective.
Opponents of the law may take comfort from a survey of nearly 1,100 U.S. residents conducted by Endicia which showed 61 percent opposed to its passage.
Among the study’s other findings:
- Forty-four percent will buy fewer items online
- Forty percent will not change
- Twelve percent will buy more at local brick and mortar stores
- Four percent will shop at big chains.
- Survey: US residents oppose Internet sales tax – PCWorld
- 44% of Shoppers Will Buy Less Online if Internet Sales Tax Passes – Mashable
- After easy passage in the Senate, online sales tax bill faces much tougher road in the House – The Washington Post
- NRF Urges Senate Support For The Marketplace Fairness Act – National Retail Federation
BrainTrust
Recent Discussions
Discussion Questions
Do you support or oppose passage of the Marketplace Fairness Act? How will passage of the legislature affect consumer buying behavior?
Poll
I do support the act and here is why. For years I have had to save my receipts from all our purchases made online. At the end of the year it takes hours just to sort them and to manually determine how much sales tax I owe on my state tax returns. Since we pay state taxes in more than one state it is a nightmare to determine which items we purchased while we were in which state.
Not a problem anymore, each time we purchase something online the sales tax will be paid at the time of purchase and my tax calculations at the end of the year will be no more. I know this is a problem for most of us who are part of RetailWire, so let’s support the bill that now needs to pass in the House.
Self-interest would argue against passage—why would I want to pay more for stuff online if I don’t have to? That said, there’s some merit to the fairness aspect. Also, hard to believe that paying the sales tax on an item is going to change shopping behavior radically. I don’t think people buy online instead of in-store because of the tax—they buy online because the listed price is cheaper.
I absolutely back this as I wrote last week.
The tide is turning, states are cash-strapped and vacant buildings in downtowns are visible reminders of customers going somewhere else to shop. With this legislation, at least the taxes that are needed to support your community will stay behind.
The price difference between the online sellers and B&M retailers is not only driven by the local sales tax, but by a variety of factors. Each business model has its own set of costs, but all in all, I expect the cost per item for an online seller to be less. Having to charge sales tax will lessen the price difference, but certainly not make it go away in the majority of cases.
The cynic in me says the rationale behind the larger online sellers supporting the act passage is that they know that they can handle the collection and payment of the myriad of taxes, but also know that some of the smaller companies will find it difficult. This advantage may play out that there are fewer online competitors.
Consumers who like the convenience of shopping whenever and wherever they want will continue to buy online as long as the total cost of acquisition (item cost, sales tax and shipping) is not greater that the cost of acquiring the same items at B&M retailers.
Aside from a fundamental aversion to giving more money to any government entity, I don’t think the MPFA is going to have much impact on online vs. B&M sales at all. B&M retailers are so uniformly focused on price as their only competitive weapon that they ignore the other obvious advantages of online shopping such as:
- 24/7 access
- shop in your slippers (or whatever)
- browse from your mouse
- change retail “outlets” without getting in your car
- unlimited variety and selection from one chair
- home delivery
and the list goes on….
As a B&M business, I support it, as the trial period for the internet has proven successful. Welcome to my world, and enjoy our freedom to tax the folks.
I believe it is time for online sales to be taxed. I spend an increasing share of my retail dollars online, (except for food) and I do so because of convenience. I’m busy and I travel a lot, so it just works better for me! I don’t mind the tax dollars going to the state of Michigan at all. We need the revenue and it will go to good use.
Much of my in-store time is primarily “work time” to browse and observe shoppers and merchandising practices, and while doing so, I may shop a bit. Or a lot!
I do have to support my name @ShopperAnnie after all!
If brick and mortar retailers believe that a digital sales tax is going to keep them in business, they have more problems than any single piece of legislation can fix.
So bring on the tax if you want, but don’t expect it to turn the digital tide. The issue is lifestyle, not taxation.
While not a fan of new or increased taxes or the cumbersome reporting mechanism that will accompany them, the playing field needs to be leveled. I am not convinced that customers will defect as suggested. Those online sellers who continue to make it easy and convenient, and engage in customer intimacy will continue to flourish.
Personally: Of course I don’t want to pay sales tax for online purchases. Nobody does.
Professionally: Difficult to say. As a website/eCommerce developer, I’ve seen the effects of ever-expanding, expensive, extremely challenging requirements for PCI (credit card security) compliance… to the point where sites I build use a third party to present the online credit card form, handle the processing, and simply pass back a “yes” or “no” to the sale… which removes liability for fraud from both my own business and my clients.
The official website for the MFA, claims that “technology has eliminated historic burdens and costs” associated with collecting sales tax in multiple states. If this is really true, then maybe the smaller online retailers have a shot at staying competitive with the big boys. Otherwise, it’s yet another act that’s likely to hurt small online retailers, under the guise of trying to help small B&M stores.
And the hidden costs of yet another governmental act… are they going to be able to enforce this?
The more I think about it, the more I’d rather see that time, money and effort spent to help small businesses build out their online/eCommerce presence, sell their products online alongside the big boys, and let those businesses, and the small development companies that can help them get online, grow in that way. A pipe dream I suppose.
Bring it on! I operate e-commerce sites and this doesn’t bother me in the least.
Taxation of online purchases is a side issue, nothing more. The popularity of online sales has more to do with these factors:
- First, the product cannot be found in a store.
- Second, the price is better, even with delivery and tax costs.
- Third, online choices and inventory are superior.
- Fourth, they deliver it to my doorstep.
- And fifth, online reviews are available, even taking into consideration the practice of “pay to review.”
As others have observed, the no-tax advantage that etailers have so far enjoyed in the US is not the only reason that people buy online nor is it the only problem facing brick and mortar retailers. However, it HAS clearly given an unfair advantage to etailers, estimated at 7% in consumer electronics for instance. That is a material price advantage by any standards.
From the perspective of fairness, there is no logical justification—none whatsoever—for allowing etailers to get away without collecting sales tax while store-based retailers—which in addition pay all sorts of property and other local commercial taxes—have to. The only valid argument for opposing this legislature is that consumers will have to pay more for goods. Some may say that is reason enough, but there are short and long-term collateral costs to foregoing this source of state tax.
Our government gets money from us, the tax payers. If they do not get it from sales tax then the government will get it somewhere else. I do not believe that it will impact online sales in the slightest or that online etailers cannot calculate state sales tax. It seems to me that those that buy more have more disposable income and can afford to pay the tax that would otherwise be paid by someone else.
The addition of sales tax will impact some sales on the margin, but has not resulted in a significant decrease in sales for Amazon in California now that they charge sales tax. It has also not resulted in a huge increase is physical store purchases. The absence or presence of sales tax is not the major decider in most cases. Business fundamentals will determine success or failure of online or physical stores, not the presence or absence of sales tax.
This is a muted discussion as the damage to B&M from online sales already peaked. The playing field is beginning to level against online retailers with the arrival of social, local and mobile.
Online-only operations are going to have to establish physical presence to interact with mobile device to stay alive in this new era. In addition, old cash registers are being replaced with mobile point-of-sale connected to the cloud creating e-commerce functionality and services to B&M operations.
I would have supported the tax 5 years ago, but right now, the tax is just kicking e-commerce while it is down, while m-commerce is rising.
I too support the tax. Paying taxes on the things we buy is, IMO, a very fair way to support our government more so than the income tax debacle. Not to start anything here. I just felt like saying that. 🙂
Will it impact buying behavior? Not discernibly!
No question it will affect buying behavior for a short time, but ultimately, I strongly believe people shop where they have the best experience. “Experience” means different things to different people and for some, it will be price, but for many it will be convenience, policies related to returns, customer support, etc.
If price was the only “experience” that counted, Tiffany’s and other high-end, customer experience focused businesses would have been closed years ago.
No, taxes should not be the reason why people shop your store (online or offline). If it is, you better quickly find another platform to attract customers or move your store into international terminals at airports.
I am not a fan of new taxation, but I do mildly support this. The internet has proven to be a major “shopping center/mall” so taxing for purchases seems acceptable.
I agree with Ben. This won’t effect online sales. However, this is just another way for government to increase taxes. They continue to increase taxes and chalk it up to being “fair.” Bottom line is if there is a way to justify increasing taxes and convince the masses that it should be done, government will do it.
So … people who are shopping sales-tax free online are evading taxes. Why are we even debating this? The taxes are owed. In my state (Connecticut) the consumer is required to pay the sales tax, also known as a use tax, if it’s not collected by the merchant. Few people voluntarily remit those owed taxes—and they are tax cheats.
What would happen if, in the spirit of level playing fields, that the burden of sales taxes was passed to the consumer for physical retail purchases? The purchaser is now expected to calculate and remit all owed sales and use taxes, not just online purchases. The physical retailer is to be freed from the burden of collecting and remitting sales tax. Do we think that the state would receive a fraction of the owed taxes?
Seems to me that if I, as a physical presence retailer, must spend my time and energy collecting, calculating, and remitting sales tax, it’s only fair that the online retailer do so also. I might also point out that a physical presence retailer might not have computer power to do this; an online retailer, by definition, has computer power at their beck and call.
I don’t want to get political. Instead, I want to comment about how it impacts business. Online retailers have an edge over traditional retailers. Taxes is just one advantage for the online retailers. There’s also an advantage by not having a physical retail location, in-store sales people, etc. All of this and more will help redefine the retail industry. Realize that five or ten years from now, it will be a completely different issue.
There are questions that need to be answered. For example, how is a state defined? Is there a tribal entity? If so, then the number of bodies that will expect to see the benefit of the sales tax will increase exponentially. What impact will this have on the cities, states, et al on the administrative support that will be required? in other words, what’s the increase in headcount, etc.?
If not thought out and made as efficient as possible, the cost may be far in excess of anything imagined.
I have been pounding the drum on this issue since 2000, so please forgive me it I beat it one more time:
Everybody should pay sales tax at the time of purchase according to the rules of the address where they receive the goods. Period.
This is a simple, fair principle that should have become routinely enforced beginning two decades ago. And it’s already the law of the land—more or less.
To make matters a bit more confusing, the concept of “nexus” is now obsolete with respect to sales tax. The United States Supreme Court applied this concept in its 1992 landmark decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992).
At that time, there was no digital commerce that might have nuanced the Court’s ruling. By the end of that decade, it was leveraged as a work-around by advocates of the new virtual economy. No physical presence = no nexus = no tax collection. But consumers still owe their local sales taxes.
Adding to the potential for misinterpretation was the 1998 Internet Tax Freedom Act, signed by President Clinton. Many e-retailers would like to interpret this as if it were an article in the Bill of Rights. Amazingly, it did not actually exempt online merchants from collecting state and local sales taxes. It did not address sales taxes at all.
I’m a bit of a hard-liner about issues of practicality too, since any online-shopping cart can instantly calculate, collect and account for sales taxes with a simple plug-in. The states need the money and they have been footing the bill for the loophole for way too long.
Exempting small merchants seems humane, but let’s face it: this is just a bit of political sugar to help the medicine go down. Whatever. Just pass the law and use the revenues to pay teachers and fix the roads.
Online life has been good for a long time, now. I am not totally convinced this legislation is required, however, I do understand its merits.
I think price trumps all for identical products, so shoppers will continue to seek the best prices both online and off.
I oppose it. All of the arguments for it are bogus. Written not with the idea of protecting any business, but strictly with the idea of funneling even more money into bloated government. Internet sales are a byproduct of a connected world. Businesses fail because they don’t adapt to the economic environment, not because of a sales tax.
Remember, all these online companies incur freight cost on every item they ship to you. Maybe UPS and the USPS are the real problem (can they actually ship product for less than the sales tax they would collect. This is like arguing for a subsidy for buggy whip manufacturers. The retailers who claim they were put out of business because internet businesses collect no sales tax are businesses that were going to fail anyway. Besides, if low prices were going to do it, then Walmart was the problem, not the internet! This legislation will not pass the house—they listen to the voters!
I strongly oppose the sales tax legislation, not because of the actual tax but because of the tremendous burden it will place on the SMB operations. This legislation is only about the government trying to find a way to collect money which is already due them, but ignored by the buying public. Most states already have laws on the books that require consumers to pay sales tax on items bought on the internet, they just do not have an effective way of enforcing or collecting it. So this legislation is not about the supposed advantage the online market has over the B&M as they would like us to think, it is all about getting additional cash flow, nothing more.
If the government can come up with a law that makes it practical and cost effective for the SMB market to collect and process the taxes then I could fully support it. Maybe set a fixed rate for all online sales, regardless of current states laws or set a minimum gross sales volume for SMBs who would have a fixed amount until sales volume reached the minimum amount. Unfortunately, I don’t see our government becoming very creative.
Today SMBs have a great opportunity to level the playing field when dealing with major competitors because of the internet. Creating a tax collection burden could very well take away that opportunity which would be unfortunate, to say the very least.
Local authorities get local rates from local businesses; these keep city and town centres trading. If you make it harder to compete in a traditional bricks and mortar store, then more of those stores will close and consequently less revenue will be available for local authorities.
The playing field should be level. Suppliers also need to play a part and support brick and mortar stores with keener pricing that takes into account the store supporting the supplier with visual displays and on-site advice.
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I do support the act and here is why. For years I have had to save my receipts from all our purchases made online. At the end of the year it takes hours just to sort them and to manually determine how much sales tax I owe on my state tax returns. Since we pay state taxes in more than one state it is a nightmare to determine which items we purchased while we were in which state.
Not a problem anymore, each time we purchase something online the sales tax will be paid at the time of purchase and my tax calculations at the end of the year will be no more. I know this is a problem for most of us who are part of RetailWire, so let’s support the bill that now needs to pass in the House.
Self-interest would argue against passage—why would I want to pay more for stuff online if I don’t have to? That said, there’s some merit to the fairness aspect. Also, hard to believe that paying the sales tax on an item is going to change shopping behavior radically. I don’t think people buy online instead of in-store because of the tax—they buy online because the listed price is cheaper.
I absolutely back this as I wrote last week.
The tide is turning, states are cash-strapped and vacant buildings in downtowns are visible reminders of customers going somewhere else to shop. With this legislation, at least the taxes that are needed to support your community will stay behind.
The price difference between the online sellers and B&M retailers is not only driven by the local sales tax, but by a variety of factors. Each business model has its own set of costs, but all in all, I expect the cost per item for an online seller to be less. Having to charge sales tax will lessen the price difference, but certainly not make it go away in the majority of cases.
The cynic in me says the rationale behind the larger online sellers supporting the act passage is that they know that they can handle the collection and payment of the myriad of taxes, but also know that some of the smaller companies will find it difficult. This advantage may play out that there are fewer online competitors.
Consumers who like the convenience of shopping whenever and wherever they want will continue to buy online as long as the total cost of acquisition (item cost, sales tax and shipping) is not greater that the cost of acquiring the same items at B&M retailers.
Aside from a fundamental aversion to giving more money to any government entity, I don’t think the MPFA is going to have much impact on online vs. B&M sales at all. B&M retailers are so uniformly focused on price as their only competitive weapon that they ignore the other obvious advantages of online shopping such as:
and the list goes on….
As a B&M business, I support it, as the trial period for the internet has proven successful. Welcome to my world, and enjoy our freedom to tax the folks.
I believe it is time for online sales to be taxed. I spend an increasing share of my retail dollars online, (except for food) and I do so because of convenience. I’m busy and I travel a lot, so it just works better for me! I don’t mind the tax dollars going to the state of Michigan at all. We need the revenue and it will go to good use.
Much of my in-store time is primarily “work time” to browse and observe shoppers and merchandising practices, and while doing so, I may shop a bit. Or a lot!
I do have to support my name @ShopperAnnie after all!
If brick and mortar retailers believe that a digital sales tax is going to keep them in business, they have more problems than any single piece of legislation can fix.
So bring on the tax if you want, but don’t expect it to turn the digital tide. The issue is lifestyle, not taxation.
While not a fan of new or increased taxes or the cumbersome reporting mechanism that will accompany them, the playing field needs to be leveled. I am not convinced that customers will defect as suggested. Those online sellers who continue to make it easy and convenient, and engage in customer intimacy will continue to flourish.
Personally: Of course I don’t want to pay sales tax for online purchases. Nobody does.
Professionally: Difficult to say. As a website/eCommerce developer, I’ve seen the effects of ever-expanding, expensive, extremely challenging requirements for PCI (credit card security) compliance… to the point where sites I build use a third party to present the online credit card form, handle the processing, and simply pass back a “yes” or “no” to the sale… which removes liability for fraud from both my own business and my clients.
The official website for the MFA, claims that “technology has eliminated historic burdens and costs” associated with collecting sales tax in multiple states. If this is really true, then maybe the smaller online retailers have a shot at staying competitive with the big boys. Otherwise, it’s yet another act that’s likely to hurt small online retailers, under the guise of trying to help small B&M stores.
And the hidden costs of yet another governmental act… are they going to be able to enforce this?
The more I think about it, the more I’d rather see that time, money and effort spent to help small businesses build out their online/eCommerce presence, sell their products online alongside the big boys, and let those businesses, and the small development companies that can help them get online, grow in that way. A pipe dream I suppose.
Bring it on! I operate e-commerce sites and this doesn’t bother me in the least.
Taxation of online purchases is a side issue, nothing more. The popularity of online sales has more to do with these factors:
As others have observed, the no-tax advantage that etailers have so far enjoyed in the US is not the only reason that people buy online nor is it the only problem facing brick and mortar retailers. However, it HAS clearly given an unfair advantage to etailers, estimated at 7% in consumer electronics for instance. That is a material price advantage by any standards.
From the perspective of fairness, there is no logical justification—none whatsoever—for allowing etailers to get away without collecting sales tax while store-based retailers—which in addition pay all sorts of property and other local commercial taxes—have to. The only valid argument for opposing this legislature is that consumers will have to pay more for goods. Some may say that is reason enough, but there are short and long-term collateral costs to foregoing this source of state tax.
Our government gets money from us, the tax payers. If they do not get it from sales tax then the government will get it somewhere else. I do not believe that it will impact online sales in the slightest or that online etailers cannot calculate state sales tax. It seems to me that those that buy more have more disposable income and can afford to pay the tax that would otherwise be paid by someone else.
The addition of sales tax will impact some sales on the margin, but has not resulted in a significant decrease in sales for Amazon in California now that they charge sales tax. It has also not resulted in a huge increase is physical store purchases. The absence or presence of sales tax is not the major decider in most cases. Business fundamentals will determine success or failure of online or physical stores, not the presence or absence of sales tax.
This is a muted discussion as the damage to B&M from online sales already peaked. The playing field is beginning to level against online retailers with the arrival of social, local and mobile.
Online-only operations are going to have to establish physical presence to interact with mobile device to stay alive in this new era. In addition, old cash registers are being replaced with mobile point-of-sale connected to the cloud creating e-commerce functionality and services to B&M operations.
I would have supported the tax 5 years ago, but right now, the tax is just kicking e-commerce while it is down, while m-commerce is rising.
I too support the tax. Paying taxes on the things we buy is, IMO, a very fair way to support our government more so than the income tax debacle. Not to start anything here. I just felt like saying that. 🙂
Will it impact buying behavior? Not discernibly!
No question it will affect buying behavior for a short time, but ultimately, I strongly believe people shop where they have the best experience. “Experience” means different things to different people and for some, it will be price, but for many it will be convenience, policies related to returns, customer support, etc.
If price was the only “experience” that counted, Tiffany’s and other high-end, customer experience focused businesses would have been closed years ago.
No, taxes should not be the reason why people shop your store (online or offline). If it is, you better quickly find another platform to attract customers or move your store into international terminals at airports.
I am not a fan of new taxation, but I do mildly support this. The internet has proven to be a major “shopping center/mall” so taxing for purchases seems acceptable.
I agree with Ben. This won’t effect online sales. However, this is just another way for government to increase taxes. They continue to increase taxes and chalk it up to being “fair.” Bottom line is if there is a way to justify increasing taxes and convince the masses that it should be done, government will do it.
So … people who are shopping sales-tax free online are evading taxes. Why are we even debating this? The taxes are owed. In my state (Connecticut) the consumer is required to pay the sales tax, also known as a use tax, if it’s not collected by the merchant. Few people voluntarily remit those owed taxes—and they are tax cheats.
What would happen if, in the spirit of level playing fields, that the burden of sales taxes was passed to the consumer for physical retail purchases? The purchaser is now expected to calculate and remit all owed sales and use taxes, not just online purchases. The physical retailer is to be freed from the burden of collecting and remitting sales tax. Do we think that the state would receive a fraction of the owed taxes?
Seems to me that if I, as a physical presence retailer, must spend my time and energy collecting, calculating, and remitting sales tax, it’s only fair that the online retailer do so also. I might also point out that a physical presence retailer might not have computer power to do this; an online retailer, by definition, has computer power at their beck and call.
I don’t want to get political. Instead, I want to comment about how it impacts business. Online retailers have an edge over traditional retailers. Taxes is just one advantage for the online retailers. There’s also an advantage by not having a physical retail location, in-store sales people, etc. All of this and more will help redefine the retail industry. Realize that five or ten years from now, it will be a completely different issue.
There are questions that need to be answered. For example, how is a state defined? Is there a tribal entity? If so, then the number of bodies that will expect to see the benefit of the sales tax will increase exponentially. What impact will this have on the cities, states, et al on the administrative support that will be required? in other words, what’s the increase in headcount, etc.?
If not thought out and made as efficient as possible, the cost may be far in excess of anything imagined.
I have been pounding the drum on this issue since 2000, so please forgive me it I beat it one more time:
Everybody should pay sales tax at the time of purchase according to the rules of the address where they receive the goods. Period.
This is a simple, fair principle that should have become routinely enforced beginning two decades ago. And it’s already the law of the land—more or less.
To make matters a bit more confusing, the concept of “nexus” is now obsolete with respect to sales tax. The United States Supreme Court applied this concept in its 1992 landmark decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992).
At that time, there was no digital commerce that might have nuanced the Court’s ruling. By the end of that decade, it was leveraged as a work-around by advocates of the new virtual economy. No physical presence = no nexus = no tax collection. But consumers still owe their local sales taxes.
Adding to the potential for misinterpretation was the 1998 Internet Tax Freedom Act, signed by President Clinton. Many e-retailers would like to interpret this as if it were an article in the Bill of Rights. Amazingly, it did not actually exempt online merchants from collecting state and local sales taxes. It did not address sales taxes at all.
I’m a bit of a hard-liner about issues of practicality too, since any online-shopping cart can instantly calculate, collect and account for sales taxes with a simple plug-in. The states need the money and they have been footing the bill for the loophole for way too long.
Exempting small merchants seems humane, but let’s face it: this is just a bit of political sugar to help the medicine go down. Whatever. Just pass the law and use the revenues to pay teachers and fix the roads.
Online life has been good for a long time, now. I am not totally convinced this legislation is required, however, I do understand its merits.
I think price trumps all for identical products, so shoppers will continue to seek the best prices both online and off.
I oppose it. All of the arguments for it are bogus. Written not with the idea of protecting any business, but strictly with the idea of funneling even more money into bloated government. Internet sales are a byproduct of a connected world. Businesses fail because they don’t adapt to the economic environment, not because of a sales tax.
Remember, all these online companies incur freight cost on every item they ship to you. Maybe UPS and the USPS are the real problem (can they actually ship product for less than the sales tax they would collect. This is like arguing for a subsidy for buggy whip manufacturers. The retailers who claim they were put out of business because internet businesses collect no sales tax are businesses that were going to fail anyway. Besides, if low prices were going to do it, then Walmart was the problem, not the internet! This legislation will not pass the house—they listen to the voters!
I strongly oppose the sales tax legislation, not because of the actual tax but because of the tremendous burden it will place on the SMB operations. This legislation is only about the government trying to find a way to collect money which is already due them, but ignored by the buying public. Most states already have laws on the books that require consumers to pay sales tax on items bought on the internet, they just do not have an effective way of enforcing or collecting it. So this legislation is not about the supposed advantage the online market has over the B&M as they would like us to think, it is all about getting additional cash flow, nothing more.
If the government can come up with a law that makes it practical and cost effective for the SMB market to collect and process the taxes then I could fully support it. Maybe set a fixed rate for all online sales, regardless of current states laws or set a minimum gross sales volume for SMBs who would have a fixed amount until sales volume reached the minimum amount. Unfortunately, I don’t see our government becoming very creative.
Today SMBs have a great opportunity to level the playing field when dealing with major competitors because of the internet. Creating a tax collection burden could very well take away that opportunity which would be unfortunate, to say the very least.
Local authorities get local rates from local businesses; these keep city and town centres trading. If you make it harder to compete in a traditional bricks and mortar store, then more of those stores will close and consequently less revenue will be available for local authorities.
The playing field should be level. Suppliers also need to play a part and support brick and mortar stores with keener pricing that takes into account the store supporting the supplier with visual displays and on-site advice.