Local retail supporter has a problem with lack of online sales tax collection

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jdomaha

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Rick Galusha, an ex-president of a local music retailer here in Omaha and the founder of a pro-retail organization, has written a column in our local paper bemoaning the lack of sales tax collection on online sales.

For the most part, this shift toward online sales does not capture sales taxes — negatively impacting state and local government budgets. The shift also is creating an uneven playing field that favors online retailers against local “brick” retailers, since a tax-free purchase may equate to as much as a 12 percent discount in some markets (7 percent here in Omaha).
Put another way, the immediate effect of a discount on tax-free online purchases sends wealth out of the Omaha market. And, as a community, we lose the benefit of the economic multiplier effect created by that money circulating throughout our state and community. In the long term, we also may risk losing retail jobs. And, as we all know, the retail industry is a significant employer.
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Everyone has an angle. Homers, along with every other music retailer, was hit hard when music sales and file sharing started up online. Why pay 18 bucks for a new CD from Homers when you can buy it from Amazon for 14 and not have to pay sales tax?

In its early guise, government nurtured the viability of online companies by allowing this issue to go unnoticed. According to the U.S. Census Bureau, in the first quarter of 2009, online sales were $31.7 billion. By any standard, the online retail industry has been sufficiently incubated.
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Fuck you.

If I'm living in Florida, you want me to collect Nebraska sales tax and send it to Lincoln? When I buy gas in Iowa that's 12 cents cheaper than the gas in Omaha, should Iowa be collecting that lost revenue and sending it to Lincoln?

Again, fuck you, Rick Galusha.

Finally, this is not an advocation for a new tax. Nor should a reasonable person misconstrue this to be a call to increase taxes.
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Fuck.

You.

I wasn't paying taxes before, now you want me to pay sales tax on a purchase. How is that not a tax increase on me?

And fuck Omaha.com for being such a slow site now. Here's the url if you want to read it: http://omaha.com/article/20090630/NEWS0802/706309998/-1/NEWS
 


The main gig I have that pays the bills right now is for a multichannel merchant - they do both online/e-commerce/web sales as well as brick and mortar stores. They started out online, and still do most of their business online, so they're just as against this bullshit about web-based purchases being subject to sales tax. Right now, they collect sales tax on orders shipped within the state their stores are located in. All of the tax is collected and paid based on the city the warehouse is located in, so there's one tax rate and it's only charged to some customers.

If this "streamlined" sales tax project goes through, they'll be responsible for collecting taxes based on the city the package is shipped to. For every state in the US. Meaning they'll have to keep up with literally thousands of tax rates. The reporting is going to be a bitch.

It's interesting, though - I get a few different industry publications and the National Retail Federation is behind this in a BIG way. Why? Because brick & mortar stores feel like not having to pay sales tax is an "unfair price advantage" for websites. Basically, they're worried that you'll buy your shit online instead of in your local store so you can avoid paying sales tax. That's also why instead of keeping the system where the sales tax rate is charged based on where the item is shipped from, they want to charge the tax based on where the person who is ordering and receiving the item lives.

It's getting a lot of talk at the federal level now because federal-level politicians see it as a way they can help the states out of a budget crunch without having to spend any of their own money.

There's also a huge company called CCH that already has a whole "solution" setup for online retailers once this goes into effect that manages collecting the right sales tax, all the reporting, etc., and it ain't cheap. Needless to say, CCH is a BIG fan of seeing this through.

If you're interested in more info, they've actually been trying to get this in place since the year 2000 under the "Streamlined Sales Tax Project" - look that up on Google or Wikipedia for more info; they claim that it's to "modernize" our sales tax system, but it's basically just a way for states and local stores to screw over web-based merchants, if you ask me.
 
thats bull because people who buy online still have to pay for shipping. if they put a tax on everything that would flip everything around. I can understand why they would want a tax but it would just create more problems. And im not even sure how you would set something up to report and pay those taxes. They would have to start creating government regulated software or some shit to put onto sites to make sure sites are paying those taxes because im sure it wouldnt be hard to hide sales tax and collect the profit yourself.

its just one more step that brings the government closer to regulating the internet.
 
Theoretically, buying online should still be cheaper because there are a shit load of costs a bricks n mortar store has that an online retailer does not. Specifically rent on a retail premises, and the attendant bills (dunno what it's like in the States, but here electricity gets charged differently based on who's getting it for what. Certain businesses types get it WAY cheaper). Different employee requirements (a guy that just packs boxes is going to be cheaper per hour than someone that needs to be passably attractive and know shit about your stock for when customers ask).

That so many sites are almost as expensive as going to the shops, sometimes even more so after adding in shipping, is bullshit... so much of the retail mark up is just there to pay for the costs of running the business.
I really think a lot of online retailers have a LOT more scope to cut their retail prices and avoid the tax from being an issue. Not to mention lower retail price means lower absolute payment on tax as well.
 
lets say this does go through, couldn't this drive business out of the states? since it is online its not like web businesses are stuck in a certain location. i know the sites dont pay the taxes the users do but if lets say amazon were to be based out of china the user wouldnt have to pay a sales tax right? and the tax on high priced items might warrant paying the shipping from china. which would save money for the user and bring more people to the site for the extra money saved?
 
erifdekciw said:
lets say this does go through, couldn't this drive business out of the states? since it is online its not like web businesses are stuck in a certain location. i know the sites dont pay the taxes the users do but if lets say amazon were to be based out of china the user wouldnt have to pay a sales tax right? and the tax on high priced items might warrant paying the shipping from china. which would save money for the user and bring more people to the site for the extra money saved?
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The second Amazon shipped from a warehouse located anywhere in the US, the states would be all over them for sales tax, so they'd have to ship things in from overseas. Shipping things in from overseas costs a LOT more. You'd be shocked if you knew just how little Amazon pays to ship the average order to you, because they have a massive network of warehouses throughout the US and they have a kickass agreement with UPS. From talking to our UPS account rep and seeing the rates we get on fulfillment, I wouldn't be surprised if Amazon can send something UPS Ground for under $3. And, given how close the warehouses are to the majority of the population, that $3 expense gets the package to the customer in 1-3 days. There's no service like that from China to the US.

And, going overseas is only an option for the big guys. The average website is run by a much, much smaller operation than you'd probably expect, and they wouldn't be able to just move everything overseas.

I think the government realizes that - that we can all bitch about it, but when it comes down to it, web-based merchants can't all just jump ship and leave the country. Unless there's a big outcry from the voters, streamlined sales tax will get enacted eventually, it's just a matter of how long it can be delayed if you ask me. Sucks.
 
Homers wasn't hit so much by online but by there complete shit business model. I remember best buy was selling cd's for $10 when homers had them for $16.

I remember as a kid everyone was saying to go to bestbuy and how much homers was a ripoff ect ect. I think the only reason homers got so big is that was the ONLY place in town to buy cd's. If you wanted a CD, you had to get it from them, they could have charged $30 and you would of had to pay that. Once they had some competition they just couldn't keep up.

They mark everything up 55% and if doesn't sell, welp, its not our fault we are too dumb to adjust our business model.


Atleast thats how it looks like it went down from the outside. Hell I remember their "liquidation" prices when they were closing down was still more expensive then other places.

Guy was too weak to adapt imo
 
The sad thing is that even though they have had at least ten years notice, so to speak, this sort of rhetoric and guilt tripping is the best that most local retailers have to offer in response to competition from internet retailers. "Buy local because your conscience demands it" is what they scream at the top of their lungs. If I can get the same product for less at a chain that has a reputation at least for having a workable customer return policy, I'll buy it there.

Most local retailers have shitty customer service. They treat their employees worse than their customers. And they treat their vendors worse than that. The only way most of these milquetoast pissants can manage to stay in business is to whine and play their fiddle.

Might sound a little bitter. But I will say that there are lots of great, well-run locally owned businesses. Just sick of dealing with the ones who, now that times are tough, feel as though they are owed my business despite not offering me one single, solitary fucking reason why I should choose them over their competition.
 
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