Anyone who has shopped online knows how powerful paying no sales tax is when considering a purchase. Amazon already has the best price on a lot of items and the added bonus of not having to pay any sales tax seals the deal for many shoppers. This is great for consumers but not so much for small online businesses, local businesses or brick-and-mortar retailers.
Monday night the US Senate passed a bill to remove this advantage from online retailers that do not have a physical presence in the same state as the buyer. The bill, which was given the persuasive name of Marketplace Fairness Act, will require all Internet retailers to collect sales tax. If this bill passes the House it will be a huge win for state governments because they are losing an estimated $11 billion in taxes annually due to online sales.
Online retailers already have the burden of shipping costs to contend with, and for the smaller retailers that can add up to become a big deal. Compounding the ever increasing shipping costs with sales tax could spell trouble for several small online businesses trying to compete against big box stores and online giants. EBay is doing their best to back small business owners by asking for a larger allowance on the annual sales a company can have in order to remain exempt. Amazon, however, is backing the bill.
This is a tough call for many people to make as sides are taken on this issue. Back the states, several of which are suffering financially? Back small businesses that are responsible for fueling the economy? Either way, we will know soon enough when the House takes their turn to vote.