Generally, I try to steer away from political issues, so I do not think I have ever written a column about taxation. But I have reached my boiling point over the issue of imposing a tax on Internet sales.
Let me begin by saying that I do not like to pay taxes and wish the government could manage our money better. I have never recommended a tax increase before, but I am an advocate for a tax on Internet sales. Now I am not arguing that this is a necessary source of revenue -- which it is. Rather, I am suggesting that levying a tax on Internet sales from out-of-state merchants can help level the playing field for small businesses.
Small businesses are the heart and soul of our country -- retailers, in particular. Retailers have to compete with Internet companies in so many ways and they just cannot compete effectively if they are working with one hand tied behind their back.
By exempting out-of-state sellers from having to collect sales tax, you are giving these non-resident merchants a 6 to 7 percent cost advantage. Now the government in Florida wants residents to voluntarily send the state taxes earned on Internet sales. You can guess how well that has worked out. And merchants who reside in Florida still have to pay sales taxes to residents on all goods sold via the Internet.
State governments should impose a tax on Internet sales of non-resident companies. California now collects taxes on large, out-of-state Internet providers and is expected to pull in over $300 million dollars in additional revenues. Seven other states have also closed the loophole and now collect sales tax from all Internet merchants serving their states.
The National Governors Association estimates that states are currently missing out on more than $22 billion each year in potential Internet sales tax revenue. Both the House and Senate have introduced bills to remedy this.
We need to do everything we can to promote small business retailers, especially since they do not have the luxury of being able to hire lobbyists to protect their interests like large retailers can. Imposing a tax on out-of-state Internet merchants will not give local small businesses an advantage but will just allow them to compete on a fairer playing field.
What can you do? Please write your state representatives and senators as well as their U.S. counterparts and request, not that they impose a new tax, but that they level the playing field between Internet businesses and small business retailers. We need small businesses to flourish in order for local economies to do well.
Jerome S. Osteryoung, director of outreach services at the Jim Moran Institute in the College of Business at Florida State University, can be reached at 850-294-7477.