The indispensable Arkansas Democrat-Gazette on Tuesday turned a spotlight on an injustice being done to retailers in Arkansas, the local mom-and-pop enterprises that bring life to any town’s Main Street, an injustice that also hurts local government. That is the inability of states to collect sales taxes on online purchases.
As it now stands, states can require businesses to collect sales taxes only if that business has a physical presence in the state, such as a store or office. Taxpayers are supposed to pay taxes on their internet purchases but most don’t. This situation penalizes local retailers, who are required to collect sales taxes and are put at a price disadvantage by online retailers (think Amazon). It also penalizes state and local governments, which are being deprived of billions of dollars in revenue.
Arkansas Congressman Steve Womack told the newspaper that he planned to introduce legislation this year to remedy that and create “a level playing field for Arkansas merchants competing against out-of-state businesses that are able to sell products tax-free.”
It would be yet another attempt by Womack and others in Congress to end this obvious unfairness. The Senate passed the Marketplace Fairness Act of 2013, which would have required big online retailers to collect sales taxes and return them to local government, but it failed to get past a House committee. The Arkansas Grocers & Retail Merchants Association supported the Fairness Act, as did Wal-Mart, Target and Amazon itself.
Online retailers once needed the encouragement that the freedom from collecting and remitting sales taxes gave. That time is over. Now our neighborhood merchants, who provide local jobs and who give time and money to local charities, are not asking for help. All they want, as Womack says, is a level playing field. And state and local government need the revenue to which the taxpayers have said they’re entitled.