With the midterm elections over, it’s time for Congress to fix the broken sales-tax system that makes it difficult for local businesses in Tucson and all of Arizona to compete with online-only retailers who have an unfair advantage in the marketplace.
Because of a Supreme Court decision handed down over two decades ago – when the Internet was new and e-commerce was in its infancy — online-only retailers today are able to sell their merchandise without collecting sales tax. It’s not that these taxes aren’t due — just that online retailers don’t have to collect them.
This situation has serious negative consequences for small businesses, the communities we serve and for local and state sales-tax collections. Lost revenue for Tucson and the rest of the state exceeds $630 million annually.
This is money desperately needed to adequately fund our schools, services and fix our decaying roads. With this added revenue, many economists have projected states could lower taxes in other areas, which is why e-fairness is a nonpartisan issue supported by a majority in our state Legislature.
As the seven-year owner of Renegade Classics of Tucson, a local motorcycle clothing and accessories shop, I have observed many times that the opportunity to avoid paying our local 8.1 percent sales tax motivates many customers in their decision on whether to purchase locally or online. Only the fact that it is very hard to buy much of what I sell without trying it on first has saved mine and other apparel- and footwear-oriented stores from demise.
Some customers will gladly shop our store, waste our time to gain product knowledge and find out their size. Then, they spend their money out-of-state where the profits are taxed to benefit economies outside of Arizona. Others support local businesses and value the services we provide.
Most of us are guilty of looking at something at a local merchant and later buying it online to save a few bucks. Customers are just doing what consumers do. They are the not problem, the tax code is.
At the end of the day, Main Street businesses like mine all the way up to the big brick-and-mortar stores constitute the lifeblood of Arizona cities and towns. As local retailers we provide jobs, we pay taxes that support our communities, we get involved and give back to the neighborhoods in which we work and live, and we keep the economy running.
How is it fair that we have to start out at an automatic price disadvantage compared to our online competition?
Local retailers do not want an advantage over Internet companies. We simply believe that all retailers should be required to play by the same rules. We also do not support a tax increase.
We just want the taxes that are already on the books to be fairly applied to all sales, regardless of where the purchases take place.
The Marketplace Fairness Act passed the Senate last year. It would close the tax loophole that hurts Main Street retailers and local governments, and give all retail businesses the same opportunity to compete and grow.
We need U.S. Reps. Ron Barber, Ann Kirkpatrick and Raul Grijalva to show their support for local Arizona retail businesses by passing e-fairness legislation like the Marketplace Fairness Act and letting all businesses compete on a level playing field.
But most importantly, we need this to happen this year. We can’t afford to wait any longer. Anyone who claims to support our local small businesses should join me in calling on the Arizona congressional delegation to pass e-fairness without delay.