Online retailers are welcome in Washington, but they should be required to play by the same rules as brick-and-mortar retailers. That means charging state sales tax for Internet purchases, a concept that has drawn bipartisan support around the country but has yet to gain traction in Congress (what else is new?).Gov. Chris Gregoire is looking to change that unfair status quo during her final month in office, and several factors work in her favor. A Monday story by The Associated Press said Gregoire is increasing pressure for a congressional plan that would allow the 45 states that collect sales tax to do so with online purchases. Tennessee Gov. Bill Haslam is among many Republican advocates of such a bill.
A double dose of timing could be among the most powerful cards in Gregoire’s hand. In the homestretch of her two-term reign as governor, there’s less cause to be polite. That, though, wouldn’t necessarily be much of a change for Gregoire, a tough negotiator on several other issues. The second timing factor involves the current Congress, which is about to enter its own lame-duck session. With recent news that members of Congress might be moving toward a bipartisan solution to avoid the fiscal cliff, Gregoire knows they might be more open to ideas about revenue solutions for states. If Congress cannot succeed on fiscal cliff negotiations, there’s virtually no hope of helping states on this matter.
“I will tell you that our companies in this state are suffering mightily because of this fundamental unfairness,” Gregoire said recently. And that is why The Columbian has long supported a state sales tax for online purchases. The state Department of Revenue has estimated such a change could mean $483 million for the state during the 2013-2015 biennium. The National Conference of State Legislatures says $23 billion could be at stake for the states combined.
To be clear, this would not be a tax increase so much as it would be the collection of taxes that should have been paid all along by all retailers. And such a bill appeals to both political parties — to Democrats because it’s a revenue generator and to Republicans because it’s a states’ rights issue. Each state would decide to collect the online sales tax. Washington has already decided, passing the Streamlined Sales and Use Tax Agreement in 2008. It allows collection of sales taxes from online retailers within 90 days of Congress passing such a law.
But more than a tax issue, this is a business issue. As if Washington businesses don’t have enough financial difficulties, they must continually deal with an unfair tax system that allows online competitors to avoid paying reasonable state sales taxes.
This is killing many small businesses statewide. And here’s the ultimate indignity for a business owner, which we described in an editorial last year: A customer walks into a store that’s struggling to stay in business, picks up a product, turns it around and looks on the back, and writes down the model number. Then the “customer” puts the product back on the shelf, leaves the store and goes home to buy the product online without paying sales tax.
It’s high time to remedy such an injustice in the highly competitive business world.