Congress approved a huge omnibus bill last weekend with more than a trillion dollars in federal spending and a Christmas-tree-sized list of add-on measures that continue to emerge.
One bill we haven’t seen on that list is the Marketplace Fairness Act of 2013. The Senate approved it, 69-27, in May 2013, but it has languished in the House.
That’s too bad, because the bill would have helped to level the playing field when it comes to mom-and-pop, bricks-and-mortar businesses versus the burgeoning world of online retailers.
The “fairness” part of the Marketplace Fairness Act stems from the fact that local retailers must collect and remit sales taxes to state departments of revenue, but their competitors in the online world are not required to do so.
That chore is left to the online customer, most of whom gleefully ignore the law, thus saving 6 or 7 percent (or more) of the purchase price.
Perhaps the imbalanced situation made sense when online retailers were tiny startups, struggling to make ends meet. But the last time we looked, many of those fledgling online e-tailers have grown into Internet behemoths, taking in huge sums of money from online shoppers without having to charge and remit the appropriate sales taxes.
Government statistics bear witness to the problem. U.S. online sales last year reached $263 billion, up from $226 billion in 2012.
U.S. Sen. Dick Durbin, D-Springfield, has been a champion of leveling the sales tax playing field between traditional and online stores by getting states involved in the collection of online sales taxes from businesses with sales of more than $1 million a year.
The bill calls for states to provide online businesses with software and otherwise work with them to set up a process for online sales tax collection.
Durbin, in remarks delivered to Senate colleagues earlier this year, noted that in Illinois, traditional retailers have lost ground to online competitors.
“It turns out,” Durbin said, “only 5 percent of Illinois taxpayers fill in that line on a state income tax return [to pay sales tax for online purchases]. I am guessing more than 5 percent of taxpayers make Internet purchases.”
Online businesses have had a sales tax advantage over traditional stores for long enough.
The time is right to approve e-fairness for online sales.