It’s not often we get to say this: We agree with both Republican Gov. Paul LePage and Democratic U.S. Rep. Chellie Pingree.
We like that they’re both advocating for passage of a bill in Congress that would allow states to collect tax on Internet sales. That’s because the bill is about equal treatment for Main Street businesses and online retailers.
The Marketplace Fairness Act would allow states to collect sales taxes from businesses that sell items online to Mainers but don’t have a brick-and-mortar presence in the state. Currently online businesses, such as Amazon.com, are not required to collect and remit sales tax, while businesses with a physical presence are.
A significant benefit of the legislation is that it could provide a much-needed revenue boost for Maine. Since 2007, the state has lost $146.6 million in state and local sales and use tax revenue, according to a study conducted by the University of Tennessee. Creating an even playing field could help more businesses compete.
The problem will only continue to grow. Consider this: online sales have multiplied from $995 billion in 1999 to $2,385 billion in 2006. With no law in place to collect sales taxes, companies will continue to be incentivized to avoid their responsibility.
Local business owners lose out when customers browse through their items and then walk outside to purchase a slightly cheaper product on their smartphone. More power to intelligent shoppers, but at the very least businesses should be playing by the same rules.
Giving states the ability to tax online purchases at their point of sale is something even Amazon is supporting, as it would still be a strong competitor. The bill would not affect small e-commerce sites, as it would exempt sellers with less than $500,000 in annual sales.
Some people worry that the bill would create an undue burden on the economy — and maybe more study will show the exemption cut-off needs to be raised — but what will happen to the economy if local businesses continue to be placed at a government-approved disadvantage to web-based businesses?
LePage is correct. The legislation would not mean a tax hike but a way to collect money already owed. It’s a way for federal law to catch up with the reality of Internet sales.
It appears unlikely that the House will vote on the bill this summer, but it’s good that LePage and Pingree are speaking out now. Congress should get going and approve this bill to bring fairness to online and local marketplaces.