As a small business owner in the supply chain industry (plumbing, heating, cabinetry and lighting) in Iowa, I have watched Internet commerce evolve fast and furiously over the last decade. The evolution of consumer shopping habits was inevitable. However, the unfair advantage that remote sellers have over the brick-and-mortar retailers that are at the heart of our community has done more damage than most imagined. Businesses in not just my industry, but also those in jewelry, shoes, biking, running, and books (among others), have been forced to alter prices or go out of business because the government is giving these online sellers a tax advantage over businesses like mine.
I have heard countless accounts from my associates on the front line of customers coming into our store, checking out our selection of high-quality products, speaking to my knowledgeable sales staff, and then one of two things will happen: 1) The customer leaves to buy the product online to avoid the sales tax. Or 2) We’re asked to lower the price to cover the sales tax. The customer falsely believes that they are receiving a better deal through the remote seller because they can avoid this tax, which is not necessarily the case.
The current law of the land is that online sellers are not required to collect and remit sales tax. However, the sales tax on that purchase is, in fact, owed to the state regardless of whether the retailer collects it. Consumers are expected (and legally required) to file all taxes on items purchased via the Internet on their year-end tax form or other special forms. So you see, bargain shopping on the Internet is not really a bargain.
In order for local businesses like mine to continue thriving in our communities, we need Congress to act now and pass e-fairness legislation. Last year, Congress had the opportunity to level the playing field once and for all by passing the Marketplace Fairness Act. The Senate passed the bill with overwhelming bipartisan support, but unfortunately the bill stalled in the House of Representatives. The Senate recently introduced the Marketplace Fairness Act of 2015 and a similar bill is expected to be introduced by Congressman Jason Chaffetz in the House.
There is real urgency in getting e-fairness legislation passed this year. Every year that Congress delays, our community suffers. Local businesses play an integral role in supporting our local economies, providing jobs and services, but we can’t do that as long as we continue giving out-of-state sellers an unfair advantage over local stores. And this isn’t just about preserving community businesses and jobs, it’s also about being transparent with consumers about what they really owe in taxes when a sale is made, regardless of whether the seller is collecting it or not.
Iowa retailers have waited long enough for a fair and level playing field. It’s clear there is bipartisan support for this legislation. It’s now the House of Representatives’ turn to protect our local businesses and economies. Representative Steve King, I urge you to back local retailers in your district and move swiftly to pass e-fairness legislation. It’s time to take care of the small businesses that allow your communities to prosper. It’s time to vote "yes" on e-fairness.
Mike Plasier is owner of Plumbing & Heating Wholesale, Inc. of Sioux City.