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Sales Tax Holiday Puts All Tennessee Retailers on Level Playing Field
Aug 05, 2011 (03:08 PM EDT)
Three-day event will force online-only retailers to compete on a level playing field with bricks-and-mortar stores - as competitive advantage is removed
NASHVILLE, Tenn., Aug. 5, 2011 /PRNewswire/ -- Today, Maggie Jetter, owner of Nashville's Tweed Baby Outfitters, joined Barbara Kasoff, President, CEO, and Co-Founder of Women Impacting Public Policy, Inc. (WIPP) to discuss the consequences traditional stores suffer when Internet-only companies are allowed a competitive advantage by not collecting sales tax.
Small retail owners in Tennessee, like Maggie Jetter, look forward to the annual sales tax holiday every year, because it allows her store to compete on a level playing field with online-only retailers like Amazon.com and Overstock.com.
For most of the year, online-only retailers are at a significant and unfair competitive advantage over Tennessee's bricks-and-mortar retailers because the online-only retailers refuse to collect the sales tax that is due on items sold. But Tennessee's sales tax holiday – which gives consumers the opportunity to save nearly 10 percent for the back-to-school season – removes this advantage, enabling traditional retailers to compete at an equal level with online-only competitors for three days.
"In today's market, retailers really have to go the extra mile to offer goods and services that are unique and competitive. At Tweed Baby Outfitters, we try to offer a personal and engaging experience to help educate our customers about the great baby products we sell," Maggie Jetter said. "And while we know this service is why many come to our store, more and more we are seeing customers come in to browse our goods, only to turn around and purchase the item through an online-only retailer. When we are collecting the sales tax that is due and others aren't, it's nearly impossible to compete. Beyond that, our small businesses are part of the community, doing things like making donations to local schools. You don't see the big Internet-only retailers doing that."
"Our interest is in stabilizing small businesses, allowing them to sustain and thrive," Ms. Kasoff said. "We want them to be able to compete on an equal and level playing field."
Professors at the University of Tennessee released a study on this issue in 2009 entitled "State and Local Government Sales Tax Revenue Losses from Electronic Commerce" (http://cber.utk.edu/ecomm/ecom0409.pdf). The study finds that state and local governments continue to lose sales and use tax revenues because of the inability to collect taxes that are due. Their estimates showed that national and local sales tax losses on e-commerce will top $11 billion next year – with $400 million in losses for Tennessee alone.
Several states have already passed legislation or are currently considering legislation to close the Internet tax loophole that exists. Most recently, Texas passed a law as part of the state's 2012 budget agreement that will require online-only retailers like Amazon to collect and remit sales tax in the state. The legislation helps Texas balance its budget without raising or creating any new taxes. Texas joins states like California, New York, Rhode Island, and others.
Tennessee's sales tax holiday is already underway and will continue through the weekend. The boost in sales could mean a boost for local communities as anywhere from 46 to 68 cents of every dollar spent at a local business stays within the community.
About Women Impacting Public Policy (WIPP): Women Impacting Public Policy is a national nonpartisan group with over half-a-million members. WIPP is the collective voice in Washington, D.C., for over 50 national women and small business organizations. WIPP advocates for and on behalf of women in business in the legislative process of our nation, creating economic opportunities for members and building alliances with other small business organizations. Visit www.wipp.org.
SOURCE Women Impacting Public Policy