Warrensburg – After years of talk about ending freeloading by online stores, which do not pay the same sales taxes paid by Main Street stores, talk continues, but little is being done – not by the General Assembly and not in Johnson County.
“I have not seen a bill filed on that topic yet,” Sen. David Pearce said Thursday.
Warrensburg Chamber Chairman Casey Lund said the chamber has not discussed pressing Jefferson City to make online stores pay the same sales taxes that paid by small businesses in Warrensburg and across Missouri.
“If there is a possibility of making a go at it, we’ll definitely discuss it and see if we can move it along,” Lund said. “Everybody just dances around it. I’ve heard it brought up a couple times, but it seems to kind of fizzle after that, so I don’t know if there’s any traction that we could make in Jefferson City.”
The Missouri Municipal League chairman, Lee’s Summit Mayor Randy Rhoads, said the issue is one business being taxed while another selling the same product is exempted is a concern because local governments rely on sales taxes to provide basic community services.
“If people continue to buy over the Internet and subsequently don’t pay their sales taxes, then local communities, if there were to be a fire, I suppose they would have to order a fire truck over the Internet,” he said. “Ultimately what happens is city services will suffer and the constituents, the very people who are spending their money elsewhere, are having to deal with less and less infrastructure. It’s a very real concern.”
Industry reporting supports the concern
“Online retailers’ holiday sales increased 15 to 16 percent thanks to strong showings on Black Friday and Cyber Monday, but in-store sales for the Thanksgiving holiday weekend declined 4.7 percent to 10 percent,” InternetRetailer reported.
“The National Retail Federation, Online and other non-store holiday season sales grew by 9 percent to $105 billion. Holiday sales in 2015 increased 3 percent to $626.1 billion,” the federation reported.
In terms of translating concern into action, Rhodes said the Missouri Municipal League has had the issue on the radar screen for several years, but sales tax ranks behind funding state roads and trying to keep state lawmakers out of city issues. Missouri roads are so underfunded that there is a danger of losing federal matching money, and last year state lawmakers forbid cities from taking actions that included trying to prevent filling landfills by banning plastic bags.
Pearce said he knows tax favoritism for online sellers concerns small business owners. He said the preference in Jefferson City is that Washington address the issue.
“With Internet sales, those are done nationally as well as internationally, and to just have a patchwork of ‘some states are in some states are out’ doesn’t really make a lot of sense,” he said. “It should be more federal legislation.”
Seven states decided against waiting for the federal government to require online stores to pay sales tax – Missouri is not among them.
Washington has had several years to enact a sales tax, but has not. Talk there persists, including Wednesday, when Sen. Heidi Heitkamp, D-North Dakota, told the U.S. Conference of Mayors’ winter meeting in Washington that her colleagues in Congress are moving to allow local governments to collect sales taxes based on online transactions.
On Wednesday, Heitkamp pledged to city leaders that Congress is nearing a “bipartisan, bicameral” agreement on a bill, the Marketplace Fairness Act, which would end the longtime tax exemption for online retailers that sell goods across state lines.
“I don’t think we’ve ever been closer to actually making this happen,” Heitkamp said, based on a StateScoop report. “For the first time, we have a piece of legislation that’s ready to go. … It moves us in the right direction in terms of leveling the playing field for Main Street businesses and guaranteeing that not only state revenue is experienced, but local revenue is too.”
Whether the act is as close to passage as Heitkamp suggested is pending.
Pearce said he understands what an uneven playing field means to small businesses.
“It is a disadvantage to Main Street. Our local business have to have the sales tax collected, whereas the Internet sales don’t,” Pearce said.
Making everyone pay the same sales tax rate might help traditional businesses that have lost customers to those sales-tax-free, online stores, Lund said.
“If it cost (customers) more and it hurt a little bit, they might change their thinking,” he said.