Shopping Tax Free on the Web Nears End

Last Thursday, the Senate passed a 63-to-30 procedural vote to pass the Marketplace Fairness Act, which is a bill ending tax-free shipping online. The final Senate vote is scheduled for May 6. With the growth of online retailers who are beginning to expand their operations nationwide, they have been benefitting from not having to charge shoppers a sales tax. This bill would replace a Supreme Court decision that was made in 1992 where it held that states could not force a retailer to collect sales tax unless they had a physical property such as a store or warehouse. The Chief Executive of eBay, John Donahoe believes that it would damage smaller retailers because it would be treating them the same way as it treats larger merchants. Amazon gave their employees color-coded U.S. maps so that it would show present red states that symbolized it would trigger sales-tax collection if travelled that far. Amazon thought of a technique to go around this by building distribution centers close to urban centers for delaying the start of sales-tax collection.

I believe that the Chief Executive of eBay made a strong point about the new bill that could possibly affect smaller businesses. Since eBay and possibly other online Web Stores collect commission fees from sellers, having a sales tax to online retailers could take away these small retailers. Overall this new sales tax on online orders can affect the amount of consumer spending through online stores, as well as have a decline in the small businesses or individuals who choose to have their business through online rather than storefronts.

Written by: Samantha Chin

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324743704578445220306876996.html?mod=WSJ_business_whatsNews

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