Should online sales be taxed?

While transactions with large companies that have distribution centers in New York State are subject to sales tax, other online sales are not.  A proposed federal law would require that all online transactions be taxed. This would “even the playing field” according to its supporters, which includes groups representing small businesses.

“A sale is a sale, no matter where it takes place,” says David B. Henry, chairman of the International Council of Shopping Centers. “By not having to collect sales tax, online retailers have a distinct competitive advantage over their local retail counterparts.”

Some local businesspeople agreed.

“It’s only fair, isn’t it?” says Cheryl Rice, manager of the Inquiring Mind Bookstore & Cafe in Saugerties.

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Others feel it’s not their place to decide how people should be taxed.

‘Do we want to be a country that just mails things to each other in boxes from warehouses, or do we want some kind of meaningful contact with each other?’

“I just show up every day and run my business as I see fit,” said Ernie Saker of Saker Guitar Works in Kingston. “As far as taxing Internet sales, I am opposed to it. Drumming up envy in order to further tax people is by my reckoning quite immoral.”

 

Interstate commerce is complicated

“Taxes aren’t really what’s hurting Main Street,” says David Friedman of Barner Books in New Paltz. “Nationally, the issue should be addressed – it’s the fair thing to do – but the issues [for small-business owners] are broader than that.”

Barner said it’s hard to compete with online retailers on price, in part because the costs of operating an online business are so much less. Plus, a huge company like Amazon can sell books at a loss knowing the same customers will return to purchase items with better margins.

And, there are inequities in the way that sales taxes are collected that favor the large retailers, he says.

“Interstate commerce is very complicated,” said Friedman. “While Amazon does collect sales taxes on items they sell in New York, they don’t collect the sales taxes on items they sell for their vendors.” Many business owners of brick-and-mortar stores affiliate themselves with large retailers like Barnes & Noble or Amazon, and sell items through the larger companies. Because the large retailers don’t collect sales taxes on those sales, though, the small vendor is left responsible for payment of those taxes out of their own pocket. “It’s a sort of penalty for the small-business owner,” says Friedman.

 

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