ERA Tells NPR Online Sales Tax Will Hurt Small Online Retailers

by Vi Paynich on Apr 14, 2014 3:35:00 PM Advocacy

On Tuesday, Bill McClellan, ERA’s vice president of government affairs, appeared on the NPR radio program, All Things Considered, to discuss Congress’ proposed Marketplace Fairness Act that would require most Internet retailers to begin collecting sales taxes.

NPR noted that some states have already enacted so-called Amazon taxes, forcing the giant online retailer to collect sales taxes the same way traditional brick-and-mortar stores do.

The story also highlighted an Ohio State study that tracked five states, California, New Jersey, Pennsylvania, Texas, and Virginia, which had recently passed such laws to analyze the effects they might have on other retailers.

According to the study, Amazon’s sales decreased about 10 percent in those states, and 2.7 percent of consumers switched to either to other online retailers or to brick-and-mortar retailers.

Authors of the study said they weren’t surprised by their findings. As costs go up, consumers will scale back spending or search for less expensive solutions. However, the Ohio State study focused mainly on consumer demand.

The Marketplace Fairness Act continues to be a hot-button issue that has divided the online retail industry. Advocates of the bill, such as Walmart and now Amazon, believe it will create a level-playing field for local brick-and-mortar retailers.

However, Internet retailers in opposition of the online sales tax such eBay contend the measure would hurt smaller retailers by imposing bigger administrative burdens on them. Like eBay, ERA has been advocating against the Marketplace Fairness Act.

During Tuesday’s interview, ERA’s Bill McClellan said the measure would decimate small online retailers, because they wouldn’t be able to absorb the cost of figuring out how to comply with thousands of tax codes around the country.

“This study does not change the policy discussion in Washington, D.C.,” McClellan told NPR’s Yuki Noguchi. “It is a very interesting study in what it examines.”

Listen to the story.

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