Internet Sales Tax Almost Official
ZDNet headlined that the US Senate passed the legislation to require Internet commerce companies to collect state sales taxes and I think it’s about time. The line against the bill has more to do with political doctrine than with sound financial management.
Who likes taxes? I don’t. But it doesn’t make a lot of sense to let some retailers completely off the hook. Historically, the feds have given special incentives and deals to groups to incentivize their behavior. When we built railroads the government paid for the work and gave the railroads free land along the lines to foster construction and settlement. Subsidies were taken away like training wheels on a big boy bike once new industries got going and that’s where this legislation is coming from.
If we look objectively at the situation, the online retailers have had a sweet deal. No sales taxes to worry over, no bricks and mortar, fewer employees, centralized distribution and the customer paid the shipping. Online retailers saved a bundle over their traditional competitors. And while it’s true that they had systems to build, data centers and logistics hubs to spin up, they had access to venture capital that mom and pop never even dream about when they’re running their store.
So now the playing field will be a bit more level. People will still shop online for all of its convenience and lower costs and mom and pop will still have to deal with all of the vagaries of brick and mortar retail. They’ll all have to collect and remit taxes to appropriate states and I can’t see what the big deal is.
By: Denis Pombriant