No more tax perks for retail giants
Even if Governor Deval Patrick doesn't meet the July 1 deadline requested by the Retailers Association of Massachusetts for requiring Amazon to collect sales taxes from customers in the state this action by the governor should come sooner than later. It is an easy call for the governor to fix a situation that is unfair to local retailers who help form the economic backbone of communities and denies the state much-needed revenue.
Retailers are required to charge taxes if they have a physical presence in a state, which became the case when Amazon opened a development lab in Cambridge earlier this year. (Online retailers should have to charge taxes in every state in which they do business regardless of their physical presence, but one step at a time.) Amazon is charging taxes in six states where it has established on the ground operations and there is no reason why it shouldn't start doing so here as well.
The online retailers' exemption from the sales tax came about essentially because the boom in Internet sales could not have been anticipated by lawmakers. Opponents of making the online retailers pay up dismissively claim that traditional retailers want to be rescued from competition, but traditional retailers are not asking for favors but for a level playing field. "We're happy to compete, but we can't when state tax policy puts us at a 6.25 percent disadvantage," says Association Vice President Bill Rennie in today's Eagle.
Online retailers won't be crippled by having to charge for a sales tax, but the local businesses that collect property taxes, hire local workers and support local charities and organizations will benefit from a more even competition. Those retailers provide customer service that a cyberspace retailer cannot. (Anyone who has received recommended book purchases from Amazon, for example, knows those recommendations are made by a computer or marketing agent not a real person who knows books.) If local retailers go out of business they leave gaping holes in communities that an online retailer won't fill.
Finally, collecting taxes from online sales would generate as much as $45 million in revenue annually, according to The Boston Globe. That is money that could be used to help pay for education, infrastructure repairs or other worthy programs. Exemp tion from the sales tax is a perk that Amazon and other online giants don't deserve and should no longer enjoy.
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