While there has been debate about the issue for years, the idea of an internet sales tax has gained steam recently, with the U.S. Senate passing the Marketplace Fairness Act in early May, and President Obama on the record as supporting it. In my opinion, the impact of an internet sales tax is two-fold. Online mom-and-pop retailers may have a tough time implementing the resources to collect taxes for every sale from every state, compared to larger entities like Amazon and Walmart. But I think the broader issue is how this will affect consumer behavior, and whether it will make consumers more likely to purchase items at local brick-and-mortar stores. In this edition of Retail Rap, I discuss these issues and how I believe they will impact the retail landscape.
The concept of an Internet sales tax has been debated back and forth for years, but with the U.S. Senate passing the Marketplace Fairness Act in early May, and President Obama on the record as supporting it, the only thing standing in the way of the new policy is the House of Representatives. Essentially, the new law would eliminate a loophole that has been in place since the beginning of e-commerce: Because existing laws required retailers to collect sales tax only on those goods that are shipped to states where they have a physical presence, customers doing their shopping online have largely been able to avoid paying any kind of sales tax. The idea is that an Internet sales tax, which would mandate that online purchases are assessed sales tax based on the state sales tax of the individual making the purchase, would put online retailers and brick-and-mortar retailers on a more level playing field.
Check out the full article from my recurring column, Retail Rap, at Chain Store Age.