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A Times Editorial

Online giants get unfair edge

For years, online-only retailers such as have had an unfair advantage because they don't collect sales tax from customers. They've billed it as a savings for consumers and lobbied heavily across the country, including in Tallahassee, to stave off a national sales tax compliance system. What they haven't said: By not collecting sales taxes, they are robbing taxpayers of a legitimate revenue stream for schools, prisons and social services.

Now that some states are boldly trying to level the playing field by requiring online retailers to collect sales taxes, and are showing their exploitative ways. They want the business, they just don't want to have to contribute to the very American system that has allowed them to flourish. The greed underscores the need for congressional intervention. It's time to get serious about a national sales tax compliance system that is fair to both consumers and business.

Under a 1992 U.S. Supreme Court ruling, online-only or catalog-based retailers can avoid collecting sales tax if they have no physical presence in a state.

Buy a book from a local bookshop or online from a national chain that has a Florida store, and sales tax is added to your bill. Buy it from Amazon, and it's not. That's not fair. It puts traditional retailers at a competitive disadvantage, and it shifts the tax burden to customers who buy locally. That burden has only gotten heavier as online retailing has exploded.

For years, a group of mostly small states, now totaling 23, has tried to force Congress to address the issue. They've voluntarily agreed to align their sales tax policies to make it easier for retailers to comply in each state. So far, Florida's lawmakers have refused to join them.

But earlier this year, North Carolina joined New York in a different approach. They require remote retailers to collect taxes if they have any business partners residing in their state — such as a seller of used books in North Carolina that sells through Amazon's site.

In response, Amazon and Overstock both announced they were severing all ties with partners in those states rather than comply with the law. They've threatened to do the same in California, Hawaii and Rhode Island, which have considered similar legislation. But here's the rub: The companies will still sell to customers in those states — they just won't help anyone living there to earn a living or pay for a school. Such exploitation shouldn't be allowed to stand. Congress needs to act.

Online giants get unfair edge 08/30/09 [Last modified: Sunday, August 30, 2009 4:30am]
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