Long before I started working in the retail industry, I supported tax fairness for e-commerce. I buy plenty of things online: the amount of money I’ve spent over the years at Newegg is pretty impressive. At the same time, though, I don’t think that online businesses should have the advantage of not being required to collect sales taxes. More and more people are finally coming around to that concept, even in Minnesota. But it’s really driving a wedge between Republicans, some of whom see this as a level-playing field issue, and some whose blinders are still on “no new taxes” mode.
Ideally, Congress would solve this problem on a nationwide basis. However, with a divided Congress, during a presidential election year, a solution is a bit less likely than John Boehner asking Harry Reid to braid his hair. Years of work at the state level on the streamlined sales tax have also been for naught. Thus, individual states are finally taking it upon themselves to start collecting sales tax on e-commerce sales.
Given the increasing amount of retail sales conducted online, if nothing changes, sales tax revenue will continue to decrease. This will lead to either higher rates to capture more revenue, putting brick-and-mortar businesses at an even greater disadvantage, or decreasing revenues leading to even larger budget deficits. Neither is tenable, and so the only solution is to start treating online businesses in the same way.
As I stated before, not everybody is on board. Noted erudite House scholar Steve Drazkowski, gutturally unable to raise taxes, has proposed those collected sales taxes to provide a tax holiday to hunters. I’m opposed to special tax breaks in general, and this one is an 11 out of 10 on the absurdity scale. If one really didn’t want to “raise taxes”, Rep. Lenczewski’s idea of a general tax rebate aimed at a slightly larger group of people than hunters would be a sane idea. However, considering that such a change would bring in about $5 million a year, or a dollar per resident, perhaps the best idea would be to simply add it to the General Fund so we can pay for things like education and health care.
Online commerce is growing, and it does represent the future. I really doubt that brick-and-mortar retailers will be driving completely out of business, but more and more commerce is going to be conducted online. In the end, which one ultimately prevails should be decided on a level playing field. As it stands now, that playing field is decidedly tilted in favor of e-commerce, and that’s unfair to plenty of businesses.