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The Verde Independent | Cottonwood, Arizona

home : opinions : opinions June 28, 2016

2/9/2012 1:11:00 PM
Editorial: Online sales tax collections needed to keep playing field level

Many Arizona business owners no doubt will keep a close eye on Arizona legislation introduced this week to balance the playing field between traditional and online retailers.

SB 1338 attempts to close loopholes that allow online retailers to avoid collecting hundreds of millions of dollars of sales taxes.

If the bill becomes law, it no doubt will be a financial boon to state government coffers. But more importantly, it brings a competitive balance to a free enterprise system that’s out of whack in this digital age.

Especially when it comes to big-ticket items such as HD television sets, home entertainment centers and major appliances, the “no sales tax” online warehouse operations have a distinct, and unfair, advantage over storefront retailers who are forced to collect sales tax.

But even retailers such as music stores and bookstores are victims of this uneven playing field.

While SB 1338 is definitely needed in Arizona, lawmakers still need to proceed cautiously and apply their thinking caps for this no-brainer.

First, should the targeted online warehouses -- Amazon.com in particular – only be assessed the state’s 6.6 percent sales tax or should local municipal assessments also apply? After all, the local mom-and-pops in the Verde Valley are equally victimized by online retailers as are the big box stores that dominate Phoenix. Further, if collecting this sales tax is good for the state, it’s also good for Cottonwood and Camp Verde.

Then there is the more sticky issue of what to do about online retailers based outside Arizona. Collecting Arizona sales tax on those online purchases is questionable, and most likely unenforceable. After all, when an Arizonan makes a purchase with a storefront retailer while on vacation in California, he or she is not expected to ante up with the tax-man back in Arizona. It makes sense the same logic should apply to online purchases with an out-of-state origin.

This digital age we live in has dramatically changed the landscape of consumerism.

But it’s still capitalism and our free enterprise system is best served if all parties are competing on a level playing field.

Related Stories:
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Reader Comments

Posted: Monday, February 13, 2012
Article comment by: There Is No Level Playing Field

In capitalism and the free market society there is no such thing as a level playing field. Taxes, shipping, handling, etc ad nauseum, what makes the system work is simply you have something I want to buy. Our local stores will never be able shelve the inventory an on line mega merchant can.
Our local stores can never stock the specialty items I can find on line for a one time purchase.
This whole sales tax gimmick is, well, a gimmick. It hurts Arizonans and does nothing to improve our business culture.It is just another grab by the politicians to squeeze every penny from my pocket.

Posted: Friday, February 10, 2012
Article comment by: Georgio Piachettapelli

"Force" seems to be the operative word here. Give us your money or we will "force" you, says the state. The state is upset because they can't "force" on-line retailers to pay tribute to them. So, they are going to "force" you to tell them how much you spent with on-line companies.

It is not free trade and you are not free if the state is standing over your shoulder with the threat of "force" casting a shadow over you.

Montana, Oregon, Alaska, Delaware and New Hampshire all manage to survive without a sales tax. If the state wants a level playing field then let them eliminate the state sales tax. That requires no "force" at all.

Posted: Friday, February 10, 2012
Article comment by: Carl Nye - Jerome

And another thing: even if lawmakers do force online retailers to charge Arizona sales tax, in many cases purchasing from the online retailer will still be a better deal because they often have lower prices, and a far wider selection of merchandise than is available locally. No local store can possibly offer the same diversity as Amazon. That's one "playing field" that can never be leveled. Looking at it this way, making Amazon charge Arizona sales tax will not make all things equal.

Posted: Thursday, February 9, 2012
Article comment by: Carl Nye - Jerome

Pesky facts again: "when an Arizonan makes a purchase with a storefront retailer while on vacation in California, he or she is not expected to ante up with the tax-man back in Arizona." Don't you wish this were so? It's not. The Arizona Use Tax, which has been on the books for many decades, states that if an Arizonan purchases something in another state, and paid no sales tax there, then that traveler owes Arizona tax on the use of that object back here at home. Not only that, the Use Tax regulations say that even if you did pay sales tax somewhere else, but it was lower than the sales tax you would have paid to buy the same thing here in Arizona, you still owe Arizona the difference between the two tax rates. Not only that, this year the Arizona personal income tax forms will include a line where you will be asked to tell the state (voluntarily) just how much use tax you haven't paid for situations such as the above (including any online purchases for which you paid no sales tax). Add to that the veiled threat that if you leave this new use tax line blank, your return will almost certainly be audited. Can you prove you didn't spend a dime anywhere except at your local merchants? And how many of us keep every receipt? How many receipts actually show the sales tax rate? The Arizona Department of Revenue is already pondering how to force online retailers to submit lists to them of everything the retailer sold to Arizona residents. Opponents of this taxation argue that it will cost the state more to acquire the data than they will eventually collect in use tax. But when has this kind of logic ever prevailed when lawmakers get the urge to exploit yet another possible money source?

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