Editorial: US House should support Marketplace Fairness Act
It has been a long time coming, but a reasonable approach to taxing online sales moved through the U.S. Senate this week.
Called the Marketplace Fairness Act, the bill would allow states to require out-of-state retailers to collect the state sales tax due on Internet sales or merchandise sold through catalogs or other means. The Senate passed the measure 69-27 on Monday.
That is encouraging, because currently online retailers have an unfair advantage.
If you make a purchase in a local store, you pay an additional 5-10 percent (depending on the state) in state sales tax. If you buy the same item online, generally you are not charged for the state sales tax. It is not that you don't owe it, because you do. But with no mechanism to collect it, few shoppers volunteer the tax out of the goodness of their heart.
Twenty years ago, when online sales were really a novelty, it hardly seemed to matter. But talk to any local merchant today -- from the chains to the Mom and Pops -- and you will get an earful about the impact of online sales.
It is difficult enough for local merchants to compete with the Internet retailers' vast inventory without giving the online retailers a price advantage, too.
"This bill is about fairness," the bill's main sponsor, Sen. Mike Enzi, R-Wyo., told The Associated Press. "It's about leveling the playing field between the brick and mortar and online companies and it's about collecting a tax that's already due. It's not about raising taxes."
However, some fear the bill will face tougher opposition in the House of Representatives, especially among some who view the measure as a tax grab by cash-strapped states. We understand their position, and it is true that states stand to benefit. The National Conference of State Legislatures estimates that West Virginia currently misses out on about $103 million annually in sales tax, Ohio about $628 million and Kentucky $224 million.
But we think the opponents are missing the real point.
Local stores and merchants are a vital part of our communities. They display products we can see, touch and feel and give us expert advice on selections. Moreover, they pay local taxes, hire local workers and support local charities.
Government needs to give them a fair shake and a reasonable chance to succeed.
That is what the Marketplace Fairness Act will do, and the House members should support it.