WASHINGTON — At The Regulator Bookshop in Durham, N.C., co-owner Tom Campbell says he is losing business as customers come in to photograph his books or jot down notes, conducting their research before they buy the books online to avoid a sales tax.
But he says Congress could end the practice by giving states the option of requiring online retailers to collect sales tax from their customers.
“Places like Amazon are literally getting a free ride with the sales tax issue — because our customers pay the sales tax that goes toward maintaining the roads that their delivery trucks drive on,” Campbell said. “And if that’s not a free ride, I don’t know what is.”
Backers say it would help equalize competition among all retailers, particularly as online sellers become bigger players in world trade. But critics say it would be wrong to let states impose yet another tax on savvy consumers who have found an easy and popular way to save a few bucks.
In a letter to congressional leaders last week, the bipartisan National Governors Association said that collecting the tax would bring $23 billion in new revenue to the states, serving as a stimulus to grow the economy.
Washington Democratic Gov. Chris Gregoire, a leading advocate, said the plan would raise $934 million for her state alone by 2017, based on an estimate from the state’s Department of Revenue.
She said that supporters have growing momentum on their side, noting that even Amazon has lined up behind the idea. And she called it “our single best opportunity to bring this fairness issue to a close.”
“I’m not down on the Internet — I shop on the Internet myself — but I want fairness,” Gregoire said. And if Congress does not allow states to collect the tax, she said, “it’s going to continue to erode the ability of the brick-and-mortar businesses in our state to stay in business.”
The issue has a long history.
In 1992, the Supreme Court ruled that retailers don’t have to collect sales taxes for out-of-state shipments if they don’t have a physical presence in the state. But the high court left the door open for Congress to establish new rules.
In November 2011, three senators — Democrat Dick Durbin of Illinois and Republicans Mike Enzi of Wyoming and Lamar Alexander of Tennessee — introduced the Marketplace Fairness Act, which would grant the taxing authority to the states.
At a Senate hearing on the proposal earlier this year, Durbin said that online retailers now have a 5- to 10-percent price advantage over local retailers because they don’t have to collect the tax.
But there’s plenty of opposition to the tax.
S.T. Karnick, director of research for the Chicago-based Heartland Institute, which bills itself as a free-market think tank, called the proposal “just another tax hike to prop up big government” after Congress spent too much money in the past decade.
New Hampshire Republican Sen. Kelly Ayotte, said the legislation would penalize her home state, one of only five that has no sales tax.
But Steven Bercu, owner of an independent bookstore in Austin, Texas, said it’s time for Congress to pass the plan.
“All it is, in the simplest language, is a fair deal,” said Bercu, president of the Austin Independent Business Alliance and owner of BookPeople, which has about 100 employees.