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 Ensure
Fair Competition
THE
ISSUE
A
marketplace that allows businesses to operate in an equitable
environment fuels fair competition. Right now, traditional
brick-and-mortar retailers are being placed at a competitive
pricing disadvantage to their online and remote counterparts.
Unlike traditional retailers, e-commerce merchants are being
granted a tax-subsidy because they are not required to collect
sales and use taxes on consumer purchases.
- As
Congress considers how sales over the Internet should be
addressed, they must consider how this issue will impact
all retailers, especially "mom and pop" stores that cannot
afford to compete in a marketplace where preferential treatment
exists.
- If
Congress extends the current Internet Tax Freedom Act (ITFA)
moratorium without addressing the sales and use tax collection
inequity, online retailers will continue to benefit from
unfair business practices, while "Main Street" merchants
will be left to bear the burden of collecting sales and
use taxes as required by the states.
FACTS
ABOUT ENSURING FAIR COMPETITION
CRequiring
online and catalog merchants to collect sales and use taxes
on consumer purchases does not create a new tax. All 45 states
that impose a sales tax also have a "use" tax. If sales taxes
are not collected at the time of an Internet sale, current
law requires the consumer to pay the equivalent "use" tax.
- The
National Retail Federation supports responsible collection
of sales and use taxes for all retail sales. All retailers,
regardless of the channel, or channels in which they conduct
business, should be treated equally and be subject to the
same obligation of collecting state sales and use taxes,
as current law requires.
- In
an industry where a 1-2% profit margin is standard, a 6-8%
tax differential (the average states sales tax rate) is
a significant pricing advantage for Internet sellers. Consumers
should pick winners and losers based on factors they decide
are important, such as selection, service, and convenience.
Tax policy shouldn't provide one retailer a pricing advantage
over another.
- Small
businesses are the fastest growing segment of the economy,
employing 99% of all U.S. workers. Retailers are the fabric
of many communities, fueling local economies and providing
jobs for millions of Americans. In order to remain competitive
with their Internet counterparts, small enterprises must
be allowed to operate in a fair climate.
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