Wednesday, May 23, 2018
Business

Small-business owners support plan requiring Amazon to collect sales tax

Small-business owner Melane Nelson sees it all the time. Moms come into her store looking for information on cloth diapers, baby carriers and other kids accessories. They touch and test every product, and ask about the pros and cons.

Then they wave bye-bye and purchase their favorite items online for less money, a practice known as showrooming.

Nelson doesn't hold a grudge: "A lot of them are young families trying to save money wherever they can." But it definitely hurts sales at her store, Growing Up in St. Petersburg.

So she's all for plans that would require Amazon to start collecting sales tax on local purchases if the company opens distribution facilities in Florida. And, like many local business owners, she wants the rule extended to all online vendors, not just the big boy of the bunch.

Gov. Rick Scott announced last week that Amazon intends to build one or more "fulfillment centers" in the state, including a 1-million-square-foot warehouse in Ruskin in southeast Hillsborough County. The deal would create 3,000 jobs statewide but also force local consumers to pay the state's 6 percent sales tax (7 percent in Hillsborough, Pinellas and Pasco counties) on items bought at Amazon.com.

The Florida Retail Federation, which supported a sales tax fairness bill that recently died in the state Legislature, welcomed the plan, but said it doesn't go far enough in making up for the estimated $450 million a year in lost revenue. The group estimates Amazon would generate only $40 million to $60 million in sales tax annually, leaving a lot more money on the table from out-of-state online retailers.

Instead, the retail group is urging the state's congressional delegation to pass the Marketplace Fairness Act, allowing states to mandate sales tax collection on online purchases. The bill passed the Senate in May, but faces an uphill challenge from some Republican lawmakers, including U.S. Rep. Ron DeSantis, representing northeast Florida, who say it amounts to a new tax.

Rick Shook, owner of Rick's Home Theater Store in St. Petersburg, says he gets upset every time he hears that — and he's a Republican. Requiring online retailers to collect sales tax isn't a new tax, he says. It just adds teeth to an existing rule. Florida law requires residents to pay sales tax on Internet purchases, but few do, and there's no enforcement.

Shook feels the sting of showrooming on a regular basis and tries to minimize it by selling products that are exclusive to his store or aren't widely available through the Internet. But that can be tough with competitively priced TVs, also sold at Best Buy, Walmart and other big-box stores.

Shook occasionally will match a product's price from a local store, but never from an online seller. He simply can't. Keeping his doors open costs money.

Sandy Fortin, who owns eight Play It Again Sports stores in the Tampa Bay area and 27 overall in Florida, said the issue isn't just about leveling the playing field on price. It's also about supporting brick-and-mortar businesses that contribute to the community.

"We are paying property taxes that are helping the fire department, the police department and schools,'' he said. "(Online retailers) aren't paying any of that."

Fortin matches Internet prices whenever he can, but can't afford to discount an additional 7 percent to cover the sales tax, especially on baseball bats, a common item bought for less online. He views efforts to make Amazon collect the tax a base hit, but not a home run.

"I think it will help, but it's a lot bigger issue than just Amazon," he said. "All the major Internet companies should have to collect the sales tax. They are sending a lot of goods into Florida and not paying. It's just so frustrating."

Susan Thurston can be reached at [email protected] or (813) 225-3110.

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