March 19, 2013

Speakers in Wichita urge Congress to pass bill on online sales tax

For small retail stores, passage of the Marketplace Fairness Act would close a tax loophole that they say gives an unfair advantage to online retailers.

For small retail stores, passage of the Marketplace Fairness Act would close a tax loophole that they say gives an unfair advantage to online retailers.

On Tuesday afternoon, local business owners and Jason Klindt, a representative with the Alliance for Main Street Fairness out of Kansas City, spoke at Watermark Books and Cafe, 4701 E. Douglas, urging Congress to approve the legislation, which would better enable states to collect taxes from online retailers.

A federal law is needed to make regulations among all states more uniform, said Sarah Bagby, owner of Watermark Books.

“Its time has come,” said Bagby, whose business also sells products online.

Opponents of the legislation argue that the federal government shouldn’t be allowed to enact sales tax collections across state lines and that the tax could hinder growth for online businesses.

But Klindt said the legislation would exempt small businesses that generate less than $1 million in annual online revenue.

Internet retail sales have been enjoying robust sales growth over the past decade as traditional bricks-and-mortar operations have seen only modest increases.

Typically, online retailers collect sales tax only if they have a physical presence in a state. That means online retailers charge and collect substantially less in sales tax than do traditional retail stores.

Greg Hephner of Hephner TV, 737 S. Washington, has witnessed the trends in retail sales as his family business has evolved to keep up with new technology since opening more than 60 years ago. It was originally called Hephner Radio. Then it was Hephner TV and Radio. Now, it’s Hephner TV and Electronics.

In many ways, Hephner says, the Internet has helped overall sales.

“TV is obviously a highly technical thing, and people do a lot of research on it, so (the Internet) has been a good thing in that sense,” Hephner said. “People come in much more educated about what features they want.”

But an issue that bricks-and-mortar retailers say is becoming more common is “showrooming,” where consumers will come into their store to look at products in person and then buy them online instead.

“Most consumers like to touch and feel, and that’s why they are starting to talk about the ‘showrooming’ phenomenon … ” Hephner said. “The Internet has one thing to offer: price. Nothing else. Local retailers can offer price, but can also offer assistance, instruction and that social aspect, which is so much more than price.”

The Marketplace Fairness Act, sponsored by Sen. Michael Enzi, R-Wyo., has been introduced in the U.S. Senate and referred to the finance committee.

Sarah Little, communication director for Sen. Pat Roberts, declined to comment on the bill until staff had reviewed the language of the proposed legislation.

The bill’s provisions, however, could come up for a vote, she said, packaged as an amendment to the budget over the next few weeks.

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