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Treat all retailers the same

Tuesday, October 27, 2009

The next time someone tells you they got a good deal on the Internet, find out if they were asked to pay sales tax. It’s very likely their answer will be no.

That omission, multiplied by millions of transactions, is one reason why storefront businesses across the region — from Lincoln, Neb., to Jefferson City and from Topeka, Kan., to Des Moines, Iowa — struggle to compete with online retailers. It also contributes to budget problems for our state and local governments, which could use the money.

Mind you, many businesses in the Midland Empire are holding their own and some are expanding in the face of online competitors. But their profitability no doubt would be greater with a level playing field. They might employ more local workers, support a larger payroll and contribute more to building streets and schools locally.

For small businesses locked in a tight battle with online foes from other states — such giants as Amazon.com and Overstock.com — the unfairness of the present arrangement is enough to force them to revise their business strategies and to abandon some product lines altogether.

Our regional state legislators need to move to the forefront on this issue. As much as we recognize the problem exists across the country, it is here where we see the inequities up close. So far, three states in other regions have moved ahead by passing laws designed to meet a U.S. Supreme Court requirement.

The high court has ruled companies can be compelled to collect sales tax from their customers only if they maintain a physical presence — usually a store or warehouse — in the same state as their customers.

But the states of New York, Rhode Island and North Carolina have targeted “in-state hosted affiliated web sites” — widely used independent sites that link to online retailers and receive payment when customers click through — as the legal equivalent of a physical presence. Starting last summer, Amazon has been collecting sales taxes in these states while appealing in the courts.

It’s too late for this holiday shopping season, but never too late for our legislators to join in pursuing tax-law changes that would benefit small businesses, communities and the state’s financial footing.

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