Editor’s note: Letters published as guest editorials may not necessarily reflect the opinion of the newspaper. The following is from Roland Myer, president of the Tennessee Retail Association.
Did you go shopping during last month’s Tennessee sales tax holiday?
Odds are you did. Thousands of Tennesseans went shopping Aug. 2-4 all across the state at small and large retailers. It was a chance to shop for certain items and save money by enjoying a holiday from sales tax.
The success of the annual tax-free holiday is proof that consumers will shop whenever and wherever they can to save money. It’s common sense.
The tax-free holiday is just one weekend a year. Imagine how Tennessee’s brick-and-mortar retailers feel about the federal government giving online-only retailers a 365-day-a-year pass on collecting sales taxes. For many online-only retailers, every day is a tax free holiday.
Online-only retailers, unless they have a physical presence like a store or warehouse, are not required to collect sales taxes. Brick-and-mortar retailers must collect and send that tax to the state.
Many online-only retailers, by not collecting the tax, put that burden on you. Whether it’s the retailer or the consumer who pays, tax is owed on purchased goods. This isn’t a new idea, not even close. It has been the law for decades, well before the Internet was created and electronic commerce took off.
Tennessee also taxes the use of property brought into the state untaxed when purchased. This use tax was enacted in 1947.
If Tennessee sales tax is added to the price of your purchase, you do not owe use tax. However, if you buy merchandise through the Internet, over the telephone, from mail-order catalogs, etc., and sales tax is not added to the price, then you are responsible for paying the use tax directly to the Department of Revenue. The unfortunate fact is that few consumers pay the tax, and there is no practical way for the state to collect it all.
Estimates are that Tennessee loses more than $750 million a year in uncollected sales taxes — money that would go to build public parks, roads and schools.
There’s a bill in the U.S. Congress to fix this problem. The Marketplace Fairness Act has passed the Senate with the support of both Sens. Lamar Alexander, who authored the bill, and Bob Corker. The bill also has the support of Gov. Bill Haslam, Lt. Gov. Ron Ramsey and House Speaker Beth Harwell.
Tennessee’s 75,000 brick-and-mortar retailers aren’t looking for an unfair advantage or to discourage e-commerce. They believe that competition and the free market make businesses grow and prosper. They do want a level playing field where the rules apply equally to all players.
We can all agree that the Internet and online shopping are here to stay. E-commerce grows more powerful every day. The past few years have seen an explosive increase in online consumer traffic and purchasing power. The shopping experience that we knew just five years ago has dramatically changed.
Today, consumers can shop in whatever way best suits them: in a retail store, on a website, using social media, mobile apps or a catalog. It’s time for the federal government to accept this positive change and end the special treatment of online-only retailers.
The U.S. House of Representatives and Tennessee’s nine members have a chance to level the playing field. They should recognize that a sale is a sale whether online or in person and that every sale should be taxed the same. They should do the right thing by voting in favor of the Marketplace Fairness Act.