They Protesteth Too Much (Editorial)

by Arkansas Business Editors  on Monday, May. 13, 2013 12:00 am  

The thing about applying sales taxes to Internet sales is that it is impossible to argue that the current system is fair.

In states that depend on sales tax — and most do, and Arkansas more than most — making remittance of sales tax on online purchases essentially voluntary costs the states an ever-increasing amount of revenue. But more important, it gives an unfair advantage to those online retailers who, by definition, have no physical presence in the state.

They don’t own property in Arkansas. They don’t employ Arkansans. They certainly aren’t sponsoring your kids’ ball team or buying tables at your fundraising event. These are companies that are pulling money out of Arkansas as quickly and efficiently as they possibly can, in direct competition with companies that are the backbone of the local business community.

We aren’t opposed to online retail — not at all. We just think that the sales taxes that brick-and-mortar retailers must collect should also be collected by their out-of-state competitors who want access to Arkansas consumers.

The devil, of course, is in the details. A bill that sailed through the U.S. Senate last week exempts small online retailers who complain that it will be burdensome to calculate the proper sales tax for thousands of individual jurisdictions.

We could live with that exemption. But the online sellers do seem to protest too much. The same programming wizardry that brought us the Internet and income tax software and GPS mapping and apps that can calculate shipping costs could also match street addresses to a database of sales taxes that states and local jurisdictions would have every incentive to keep updated. In fact, making collection of sales taxes by online retailers accurate and efficient sounds like a great business niche for some sharp entrepreneurs.



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