The Times West Virginian

May 10, 2013

Proposed bill levels playing field for local businesses

Times West Virginian

— The study of economics is vast, complicated and debatable on almost every point.

There are those who are conservative in their estimates when given all factors to calculate into a model. There are those who are more fluid with predictions, taking into account consumer habits, extended flu seasons and good weather patterns in addition to all other factors.

Given any economic situation, you could take it to two economists and come back with impact statements that vary by billions.

But everybody should have to play by the same rules, those economists would probably say. And when everyone follows the same set of rules, we have a free market.

The Senate seemed to make a little headway toward “fair” when it voted 69-27 in favor of a bill that would allow states to collect tax from online shopping.

As the situation stands now, states and local governments can only expect to collect sales tax on an item purchased online if the store selling it has a physical presence within their boundaries.

Let’s say you’d like to purchase the latest James Patterson novel. If you log onto Amazon, place the book in your virtual cart and check out, you avoid the 6 percent West Virginia sales tax added to the bottom line. However, if you were to order that exact same book from the online site of Walmart or Target or Best Buy, which all have storefronts in the Mountain State, you’d have to pay the West Virginia sales tax.

So ask yourself the question: If you were only going to buy that book, why wouldn’t you as a thrifty consumer go for the cheaper method? What if you were buying 25 copies for your book club? Those pennies quickly add up to dollars.

Massive online retailers like eBay and Amazon have an advantage over the big box brick-and-mortar stores. They have an advantage over the small businesses that are trying to build a customer base in cyberspace.

“We ought to have a structure in place in the states that treats all retail the same,” Matthew Shay, president and CEO of the National Retail Federation, told The Associated Press earlier this week. “Small retailers are collecting (sales tax) on the first dollar of any sale they make, and it’s only fair that other retailers who are selling to those same customers the same product have those same obligations.”

The bill, which will probably have a hard time finding wheels in the House, would allow states to require businesses to collect taxes for products they sell on the Internet, in catalogs and through radio and TV ads. The proposal holds that the sales taxes collected would be sent to the state where the shopper lives.

We believe in shopping locally. Spending locally earned dollars in local stores helps our economy more than most people even understand.

However, Internet sales in the U.S. totaled $226 billion last year — a giant 16 percent spike from the year before. And what did states lose by not being able to collect taxes on those purchases? Somewhere in the neighborhood of $23 billion, according to a study from the National Conference of State Legislatures.

We’re not sure we expect any more movement on the bill because it has the word “tax” emblazoned on its cover page, which usually means a quick death in Washington, D.C.

But we think the better word to associate this bill with is “fair.”

It would be nice if local shops would stop being showrooms for people to see what they like and then run home to their computer and buy it at a “reduced” cost. At least this measure would level the playing field.