Businesses Split On Internet Tax

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(Host) Vermont’s business community is split over legislation that would require big Internet companies, including Amazon, to collect the state sales tax on all purchases from Vermont consumers.

Supporters of the bill say it will create a more level playing field between downtown businesses and the Internet giants. But opponents say the legislation will actually hurt some businesses in the state.

VPR’s Bob Kinzel reports:

(Kinzel) When the House considered this bill earlier this month, no one rose on the floor to oppose the legislation but this situation is quickly changing now that the bill is being reviewed in the Senate.

A 1992 U.S. Supreme Court decision prohibits states from requiring large Internet and mail order businesses to collect a local sales tax unless the company has a "physical presence" in the state.

The Vermont bill expands the definition of "physical presence" to include independent companies that offer their products on websites like Amazon.com.

Tasha Wallis is the executive director of the Vermont Retail Association.  Speaking on VPRs Vermont Edition, she said she supports the bill because the issue is one of tax fairness.

(Wallis) "We are very concerned about the effect on our downtowns around this state of this on line competition where sale tax isn’t being collected and we think that competition is unfair."

(Kinzel) Marc Sherman co-owns Outdoor Gear Exchange in Burlington.  It’s a company that sells some of its products through the Amazon website.

Sherman says Amazon has taken a very aggressive stand in a number of states that have passed similar bills – the company has quickly severed ties to all affiliate businesses in the state.

(Sherman) "If this bill goes through as written and Amazon decides they’re at risk and don’t want to collect Vermont sales tax on all purchases in the state and not just through us but through other online affiliates or merchants, then we’re at risk of losing a third of our business and that business amounts to, in the next year, is going to amount to 4 to 6 jobs that we’re providing for Vermonters and growing our online presence."

(Kinzel) Sherman says the best answer is the passage of a federal law that creates a consistent national policy requiring all companies to collect the sales tax.

(Sherman) "It’s something that I’ve actually been working on with Rep. Welch to try to come up with a federal solution where we can create a simple an easy federal solution so that we’re all competing on the same playing field."

(Kinzel) Wallis says Congress is stalemated on this issue and that’s why it’s critical for individual states to pass their own laws.

(Wallis) "So the states are moving forward in order to put pressure on the issue and eventually reach a good federal solution and so that’s why it’s so important that Vermont be part of these efforts."

(Kinzel) The legislation is now being reviewed by the Senate Finance committee and its future for the rest of the session is uncertain.

For VPR News, I’m Bob Kinzel in Montpelier.

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