Internet Sales Tax Issue
Posted: September 21, 2012
County boards throughout Wisconsin, including those in the Chippewa Valley, are passing resolutions that support legislation that would require online retailers with subsidiaries or affiliates located in the Badger State to collect and remit state and local sales tax. Last year alone, Wisconsin lost an estimated $157 million in revenue that could have been collected from online retailers.
A Supreme Court decision in 1992 reinforced the right of mail-order and other out-of-state retailers to refrain from collecting sales taxes from purchasers in states where they don't have a physical presence. Consequently, online sellers have a huge advantage over brick and mortar stores in those states. Nationwide, it's estimated that about $23.3 billion is lost in revenue for the 45 states that have a sales tax.
It's time that the playing field becomes level. Although it's unlikely that any congressional action will occur prior to the November elections, a recent shift by many Republican governors and lobbying by Wal-Mart and other large retailers are making it more possible that legislation will be enacted soon to help states recoup lost tax dollars.
Consumers who live in a state that collects a sales tax are technically required to pay the tax to the state, even when the online retailer doesn't collect it. In actuality, barely any shopper pays the tax, which is commonly known as a "use tax " since it's supposed to be paid directly to the state. Ten years ago, a number of states got together to streamline how they collect sales taxes. The initiative will make it easier for states to eventually recover sales taxes that are due from purchases on the Internet.
Governor Scott Walker has not taken a position on the Internet sales tax issue. However, it's probably only a matter of time before he'll cave in to the pressure being applied by large merchants. Unfortunately, the businesses that will be hurt the most by a new law will likely be the smallest players trying to sell their products on the World Wide Web.
In summary, the battle between online retailers and those with brick and mortar stores is one of fairness. And, in today's environment where states are trying to find new ways to raise revenue, it's time that all retailers play by the same rules.
RANDOM THOUGHT: By the time this editorial is read, I will have spent the first two mornings arriving in my office before sunrise as downtown Eau Claire shifts to two-way traffic. Hopefully, I drive on the right side of the road. If not, I hope city police officers are sympathetic to those of us who have 22-year-old routines traveling on one-way streets.