After years of being forced to compete on an unlevel playing field, North Carolina’s brick-and-mortar retailers are finally one step closer to having the online sales tax loophole closed for good.
In February, the bipartisan Marketplace Fairness Act was introduced in the House and Senate, and two weeks ago the Senate passed an amendment to the Budget Resolution for 2014 in support of the measure. The legislation will grant states the authority to compel out-of-state, online-only sellers to collect sales tax at the point of purchase. This will update our sales tax system to reflect the realities of the 21st century marketplace and provide a much-needed boost to small businesses across the state.
Since 1992, Internet sellers have been given a 6.75 percent advantage over their brick-and-mortar counterparts. So for the past 20 years, anytime a Charlotte resident has made an online purchase from a seller in California or Maine (with no physical presence in North Carolina), those sellers have not collected and remitted sales tax to our state, even though the tax is due. Meanwhile, every Tar Heel business, from the small mom-and-pop store to the large discount retailer, is required to do so. This is not only inherently unfair to our business owners, but it also deprives North Carolina of hundreds of millions of dollars in lost sales tax revenue. This inequity has been allowed to stand for too long. It is time to erase it.
Government is picking winners and losers
Our current sales tax system does not reflect the environment in which today’s retailers operate – where a purchase happens at a cash register on Main Street, through the click of a mouse over the Internet or by tapping an app on a smartphone. It also restricts North Carolina and other states from properly managing their own fiscal policies. The Marketplace Fairness Act will restore the state’s right to enforce its sales tax laws and allow for uniform collection of taxes that are already due.
By not requiring out-of-state, online-only sellers to collect sales tax at the point of purchase, we are threatening the survival of community retailers … and slowly transforming vibrant Main Streets to bedroom communities. Our free market system is founded on the principle of free and fair competition, where the government does not pick winners and losers. Yet that is what the status quo amounts to.
It is time to fix our sales tax policies so that our state can control its own sales tax policy, and all retailers can have a fair shot in the marketplace. Our leaders in Washington, D.C., have taken vital steps in upholding the highest principles of states’ rights and free enterprise by introducing the Marketplace Fairness Act and then voting for it on the Senate floor. I commend Sens. Kay Hagan and Richard Burr for their votes in favor of the legislation. I now encourage U.S. Rep. Mel Watt and his colleagues to show similar support in the House of Representatives. It’s time for both chambers of Congress to end the competitive disadvantage suffered by our local retailers and pass this legislation.
William G. Seymour is the chairman and CEO of Primax Properties, LLC in Charlotte.
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