Leveling the sales tax playing field
Date posted: May 28, 2013
SHERIDAN — As it moves toward discussion in the U.S. House of Representatives, some local merchants are praising a bill recently introduced by Sen. Mike Enzi, R-Wyo., that would require states to collect sales and use tax from online merchants whose sales exceed $1 million per year.
Proponents of the bill say the Marketplace Fairness Act would help eliminate an unfair discrepancy between the tax collection requirements of brick-and-mortar businesses and their online counterparts, but some worry its approval would place an additional burden on the private sector.
While online purchases are already technically subject to local sales tax regulations, the burden for reporting those purchases falls squarely on the buyer. Following an online purchase, buyers are ostensibly required to pay the tax when filing their yearly state returns.
Supporters of Enzi’s say this current state of affairs results in billions of dollars in lost revenue every year.
According to figures compiled by the nonprofit Wyoming Taxpayers Association, Wyoming collected more than $700 million in sales and use taxes in Fiscal Year 2012.
Pending approval of the Marketplace Fairness Act, some say the state stands to collect even more.
“Our state relies on sales tax collections to keep improving and keep putting more money back into infrastructure to keep making our state business-ready,” said Sheridan County Chamber of Commerce Executive Director Dixie Johnson.
“We need to make sure we keep as many dollars here as we can.”
While the Chamber hasn’t taken an official stance on the legislation, the representatives of some of its member businesses said the current situation — that is, the lack of enforcement when it comes to taxing online purchases — puts local businesses at a severe disadvantage.
Neil Hoversten, co-owner of Photo Imaging Center on Coffeen Avenue, said he feels undermined by online sellers and their ability to offer the same products for less.
“I hire local people, pay property taxes, collect sales tax, and I’m at a disadvantage to the Internet retailer,” he said. “It undermines my faith in the system.”
For his part, Hoversten said he considers sales tax an important factor of the overall retail picture because of its role in providing essential services such as firefighter, police and teachers’ salaries.
Following its introduction by Enzi, the Marketplace Fairness Act was approved by the Senate early in May by a vote of 69-27. The legislation was championed most vocally by Enzi, a Wyoming Republican, and Sen. Dick Durbin, an Illinois Democrat.
Hoversten points to the bipartisan support as evidence of the bill’s generally accepted importance.
“That’s as convincing as any vote (the Senate) has probably taken recently,” he said.
An Enzi spokesman agreed with Hoversten’s assessment of the legislation, saying its passage is important to the future health of local retail.
“A lot of people are seeing it as an issue of fairness,” said Enzi’s communications director Coy Knobel.
As for its future in the House of Representatives, Knobel said Enzi was hopeful.
“Sen. Enzi is always an optimist,” he said. “He’s going to do whatever he can to make sure that momentum carries over into the House, but it’s the legislative process and you never know.”