As co-owner of Inkwood Books in Tampa, I am all too familiar with the practice of shoppers standing in a bricks-and-mortar store, picking up products to see what they like and then using their smart phones to compare Amazon.com's price.
Whether books or shoes or toasters, you might spend hours each week helping customers find the right fit — in person or on the phone — only to have them take their business to an online-only competitor with no sales tax in the total. This is true even for those of us with online shopping at our own websites, where we follow the laws regarding sales tax collection on behalf of the state of Florida.
Recently, however, many Florida-based businesses saw less of this, during the back to school sales tax holiday. The three-day event let shoppers save on tax-free clothing, accessories and school supplies. Ironically and illogically, the definition did not include books, but a nightgown I bought was tax-free, decades after I last went back to school. At our bookstore, we chose to pick up the tab on books, offering our customers savings on their children's required summer reading and more while still contributing to state revenue.
For three days, the sales tax holiday gave retailers a temporary opportunity to compete on a level playing field with online-only competitors that benefit from the unfair competitive advantage of not charging sales tax 365 days a year. Online-only retailers like Amazon.com blatantly exploit a loophole that enables them to avoid collecting the sales taxes due on purchases. This gives them a significant and unfair advantage over law-abiding Florida-based retailers that provide local jobs, circulate three times as much money in the local economy, give more to local nonprofits, and contribute in countless ways to their local communities. As a result, small and large retailers across Florida are being forced to close their doors — resulting in lost jobs, fewer choices for consumers and depressed landscapes.
Florida Tax Watch estimates that more than 100,000 jobs were lost in our state due to e-commerce in 2008 alone. According to a University of Tennessee study, Florida will lose more than $800 million next year in uncollected taxes from online sales. Those lost dollars could pay for education, health care, law enforcement, emergency response, or transportation projects.
Like many other states, Florida has a budget crisis, and critical programs like these are at risk. Isn't it reasonable and responsible to begin to address these revenue shortfalls by enforcing laws already on the books before even considering new revenue streams? Legislators in New York, Texas and California have recently demonstrated how easily this can be done by passing laws to help their states collect revenue that is due.
As all shoppers should realize — but many honestly do not — that taxes are due on all online purchases whether or not the online retailer notifies you or collects them for your state. But Amazon.com, Overstock.com and others would rather burden you with liability for reporting and paying sales tax, instead of just collecting and sending the money to the Florida Department of Revenue on your behalf — like all Florida bricks-and-mortar businesses must do, even on our website sales.
Business owners understand and appreciate healthy competition, but a level playing field is only fair. Many factors influence spending choices, but a price advantage from state-supported favoritism of remote scofflaws over law-abiding Florida-based businesses should not be one of them.
It's time for the Sunshine State to move forward on e-fairness legislation. Giving giant online-only bullies a free pass on local taxes is unfair to community-based businesses that are committed to Florida for the long term, with personal financial investment and real — not just virtual — community ties.
Let's let the marketplace rather than the government determine who survives and who sends Florida workers to unemployment lines. Perhaps we'll discover that when the unfair price advantage is not a factor, people prefer to support their local businesses.
Carla Jimenez is vice president of the Tampa Independent Business Alliance, board member of the American Independent Business Alliance and co-owner of Inkwood Books in Tampa.