A different spin on new school tax
by Jack Mcneely
Dec 16, 2012 | 1024 views | 0 0 comments | 7 7 recommendations | email to a friend | print
Jack Mcneely
Jack Mcneely
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I was talking with a local business owner the other day, and the business owner injected an interesting concern regarding the ongoing debate of raising city taxes by 1.25 cents to pay for a new Walker High School complex.

Of course, we both see the need for a new school. But a new tax intensifies the unfair playing field that online retailers have over local brick-and-mortar businesses, many of whom have longstanding ties to their respective communities, the business owner noted.

It is hard to argue that point, especially here in Alabama where online retail giants that don’t have a physical presence in the state, like Amazon.com, offer tax-free sales. They are in direct competition with local businesses fighting to make ends meet in a sluggish economy.

And, this fight is being waged on the national stage. “Online and mail-order retailers should collect sales tax at the point of purchase, too, so there will be a level playing field,” Jason Brewer, a spokesman for the Retail Industry Leaders Association, was quoted as saying in a recent Wall Street Journal report.

Meanwhile, if you run a business with a physical storefront, collecting sales tax is straightforward. You charge your customers the sales tax required by the jurisdiction where your business is located. For example, if you operate a retail store in the City of Jasper, you collect both state and local sales taxes from customers buying merchandise at your store.

According to the Internet Tax Freedom Act (ITFA), if a business does not have a physical presence in a state, it is not required to collect sales tax for sales into that state. This rule is derived from a 1992 Supreme Court decision, which held that mail-order merchants did not need to collect sales taxes for sales into states where they did not have a physical presence.

The ITFA has been renewed through Nov. 1, 2014. Despite the name of the Act, ITFA does not preclude state and local governments from imposing existing sales tax collection requirements on companies selling over the Internet.

When it comes to online giants like Amazon.com, eight states have voted to impose their respective sales tax, including California, Kansas, Kentucky, North Dakota, New York, Pennsylvania, Texas and Washington.

On the national front, a trio of bills bouncing around Congressional chambers like hot potatos would give states the right to collect an online sales tax. The three bills include the Marketplace Fairness Act, the Marketplace Equity Act, and the Main Street Fairness Act.

A new poll finds that the majority of Americans are in favor of requiring online retailers to charge sales tax at the point of purchase.

The survey, conducted by the International Council of Shopping Centers (ICSC), found that 59 percent of Americans support Congress passing such a law, up three points since May.

A higher percentage, 71 percent, say they prefer to shop locally to keep dollars within the community.

Of those who support the online sales tax, 82 percent say they do so because “common sense dictates that if you buy a product online you should pay the same sales tax as if you had bought the same product in a store.”

I opined a few weeks ago that our state should propose a lottery system to help bolster its shrinking revenue streams. State lawmakers should also impose its state sales tax on Internet purchases. These are two fair and sustainable revenue streams that would make an immediate impact and curb our appetite to dip into “Rainy Day” funds in the future.

Jack McNeely is Publisher of the Daily Mountain Eagle and can be contacted by phone at 205-221-2840 or via email at jack.mcneely@mountaineagle.com.