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Sales Tax Fairness

Judi Hansen - Greenwood Democrat

Shoppers walk into a local store somewhere in Arkansas and pick out a TV. For argument’s sake, let’s say the TV costs $2,000. Add sales tax and the TV may cost $2,130, or more. The shopper goes home, gets on his computer, orders the same TV online for the same $2,000, but pays no sales tax.

The same process is repeated many times a day at stores large and small for items from books to computers to furniture. What a great deal! Or is it?

The local brick-and-mortar store utilized for “window shopping” employs, say, 70 full-time people with an annual payroll of $2 million; it sends a check each month to the Department of Finance and Administration in Little Rock to help pay for a variety of state operations such as public and higher education, Medicaid, prisons and much more, while a smaller portion of the state tax is turned back to cities and counties where the store is located. Cities and counties get their local tax money back, too, if that city or county has a local sales tax.

On the Internet purchase, the state potentially gets nothing.

Arkansas has a law requiring Arkansans to pay sales tax on items purchased online, but the practice is ignored more than it is followed because the onus is on the consumer, not the seller. If the online store doesn’t add tax the buyer isn’t likely to fill out the one-page form and send the state its share.

Arkansas and 21 other states are in a “streamline” compact to collect sales tax on Internet sales.

On a federal level, there is no law requiring sales tax collections on online sales. There is one working its way through Congress, however.

The Fair Marketplace Act bill has been approved by the Senate over strong objections from conservative anti-tax advocates.

Kudos to Sen. John Boozman for being a co-sponsor on the Senate bill, which won approval.

In the House, Rep. Steve Womack of Rogers took the lead, but the bill hasn’t come up for a vote, through no fault of Womack’s. House Speaker John Boehner is not on board and may block consideration, according to Mike Needham, chief executive officer for Heritage Action for America.

Womack also is getting a lot of push-back from members of his own party and is drawing considerable criticism on several other fronts.

Anti-taxers are hitting him hard and often. Their actions are misguided.

The anti-taxers say the “new tax” is a benefit to major corporations like Walmart, but Walmart operates in all 50 states and already collects sales tax and remits to appropriate states.

Smaller operations such as Arkansas-based Bedford Camera and Video also are collecting and remitting sales tax for online sales in Arkansas and Oklahoma, the two states where it has brick-and-mortar locations. Like Wal-Mart, Bedford bought the software to calculate sales tax by ZIP code.

So, Mr. and Mrs. Anti-Tax Arkansan, this is not a new tax! Any Arkansan buying goods online is required by law to remit state and local taxes to the state.

What Rep. Womack’s bill does is level the playing field for all stores — large and small brick-and-mortar businesses or large/small online operations.

There is a major exemption in the proposed federal law. Businesses that do less that $1 million in remote sales in the preceding calendar year will not be required to collect sales and use taxes.

A state DF&A official says the exemption does not apply to businesses in Arkansas doing business remotely in Arkansas.

So, the Fair Marketplace Act bill does just what it is purported to do, it injects fairness for brick-and-mortar businesses and those that operate online only.

Rep. Womack does not deserve the criticism from conservative anti-taxers who say he is creating a new tax. It is not a new tax. It’s a fair tax.

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