In an attempt to boost small business against online commerce giants, the U.S. Senate approved a new Internet sales tax bill this year aiming to force online sellers to charge its customers a tax on purchased items.
The Marketplace Fairness Act needs to be approved by the U.S. House of Representatives before becoming law. If the House votes in favor of the bill and President Barack Obama signs it, the law could go into effect as early as Oct. 1.
Until now, e-commerce marketplaces have been able to avoid collecting sales tax due to the federal government’s unwillingness to mandate broad requirements regarding purchases made online. This new measure is projected to help raise $23 billion in uncollected sales taxes.
Basketree owner Cathy Smith said she can see how companies such as eBay has the advantage over small business when it comes to competing for customers.
“It would turn me off as a customer to a local business if I knew I didn’t have to pay a sales tax buying online. I wouldn’t want to pay any kind of sales tax if I didn’t have to,” Smith said. “I can say that in all these years, it hasn’t affected me because I have a loyal following of customers who still shop here. But, I can see how some could be hurt by (that competition).”
Basketree, 112 E .Broadway St., has given Smith the opportunity to sell to residents of Mount Pleasant for 16 years. Smith expects the new bill to give her gift shop an extra bump in sales.
“I think it’s going to help us in the long run. The bill will put us on the same page as everyone else,” Smith said. “And it’s not just helping out small business, it’s helping the state as well, which is important.”
John Levy has been the general partner for all three Computers To Go locations for six years, and in that time, it has been impossible to ignore the benefits to the online companies.
“If it were me, I would have taxed them for it years ago,” Levy said. “It’s not fair for any small business to compete against that. It’s a loophole they’ve been able to get out of.”
Levy even went so far as to make a suggestion for transitioning the online companies to paying income tax on products.
“The interesting thing would be to see it down nationally on a larger scale,” Levy said. “Say, charge online sellers two percent more and lower statewide sales tax. It would help out immensely if you charge everyone a flat tax or lower the state tax by the amount you raise online.”
The local Computers To Go, located at 203 W. Broadway St., has seen its fair share of customers. The customer presence, Levy said, is what keeps small businesses afloat.
“The person who shops online isn’t the customer who walks into an average store. A person shopping at a store wants to see it, feel it and then walk out with it,” Levy said. “It impacts them because they think they can get a better deal. But even with the deals, that’s why someone like Barnes & Noble does well. They want to feel it and walk out the same day. The impatience of customers does help out. Sales tax is a good starter to tackle, and the impact is that it will allow us to be more competitive. Now, every customer is more likely to walk in the store and shop local.”