Old school retailers may soon be getting a level playing field as two new bills make their way through Congress. The Marketplace Equity Act hit the House this past October and the Senate saw the Marketplace Fairness Act introduced in November.
Both pieces of legislation are expected to permit state governments to collect sales tax on products that were previously not being taxed. Specifically, the bills will give government the ability to target sales online, through catalogues and Television infomercials.
According to analysts the District of Columbia, Maryland and Virginia can gain up to $800 million dollars in revenue from the proposed sales tax. Research conducted by the University of Tennessee breaks down the figures to show that the District can add $72.5 million to its coffers through the sales taxes. Maryland would do a lot better with an estimated $375.9 million and Virginia would be set to gain $422.6 million in tax revenue.
Backers of the bills believe that the area governments may be able to get their hands on the revenue starting at the end of the year. The two bills are expected to be passed soon because they have the support of both political parties and the backing of retailers.
Vice president of Retail Industry Leaders Association, Jason Brewer, is an advocate of the bills and has stated that,
“The current system is broken. The loopholes need to be closed, and we absolutely believe that a level playing field will benefit local retailers and state governments.”
Other opinion leaders like Kim Rueben, senior fellow at the Urban Institute located in Washington, believes that the D.C. area will gain a lot from the new tax revenue because there is a large demographic of young buyers that makes purchases online. With the passage of the bills, D.C. Metro will be able to collect on sales tax that previously was not a source of revenue.
However, the new laws also have detractors who think that the bills will have no major impact if passed by Congress. Opponents like Steve DelBianco of NetChoice say that local retailers and supporters of the bill have it all wrong. The executive director of the trade group of online retailers and purchasers states that,
“If brick-and-mortar stores think they’ll suddenly be competing with Amazon or Wal-Mart.com, they’re going to be sorely disappointed.” He points out that, “Consumers don’t shop online to save on sales tax — they do it for value, convenience and choice.”
Online retailers will have to wait until the end of the year before they can figure out if they will be filing taxes in every state, which may be a major headache. It seems that the momentum that the bills have gained will make their approval imminent and the tax-free status of online sales will become a part of internet history.
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