Packed into Senate Room 2 were brick-and-mortar retailers wearing campaign style buttons with slogans like, “Stop Internet Tax Evasion;” absent was Amazon, or any other major target of the bill, which according to Nancy Thomas, president and CEO of the Retail Merchants Association, is precisely the reason for the bill’s necessity.
“Virginia retailers give back 45 cents of every dollar in taxes, and online retailers give back next to nothing,” said Thomas. “Online retailers get all the benefits of taxes, but don’t actually give anything back to the community.”
Cynthia Coldwell, co-owner of Kelley’s Gift shop in Richmond, said she spoke on behalf of all the retailers who “shoveled their sidewalks so customers could buy gifts for loved ones.”
The absence that upsets traditional retailers has been the protector of the online giants. Since 1992 an out-of-state retailer has not been required to collect sales tax on transactions made across state lines, provided the retailer has no physical connection to the state. Under the proposed bill Amazon will have to pay taxes on commissions owed to Virginia-based affiliate websites.
Republican Senator Emmett Hanger, the bill’s author and primary political advocate, delivered opening and closing remarks for the press conference. In between, the podium served as a pep rally bullhorn for Virginia retailers who view the issue as a simple matter of fairness.
Susan Milhoan, president and CEO of the Retail Alliance, spoke about “leveling the playing field,” and attempted to quash rumors about new taxes.
“This bill is not in any way a tax increase, but rather a means of collecting a tax that already exists,” said Milhoan.
Currently Virginia residents are required to pay the sales tax for online purchases when they file their annual taxes, but most residents are either unaware of the procedure, or simply disregard it.
“We can’t ask citizens to keep a shoe box full of invoices around the house so they can pay their taxes,” said Hanger. “The system just doesn’t work as it is.”
Despite the enthusiastic tone of the assembled retailers, similar online sales tax bills in other states have failed to deliver on promised revenue. Amazon and Overstock simply end their relationships with affiliate advertisers in the state and head elsewhere, avoiding the sales tax, but still remaining a competitor.
“If they decide to leave and not respect fairness and integrity in business, then they’re not the types of businesses we want in Virginia anyway,” said Hanger.