A competitive retail marketplace is good for everybody. Customers get better prices, better selection and better service. Retailers are rewarded for competing and winning their business. For that system to work though, you need to have a level playing field for everyone. That’s what the Marketplace Fairness Act is about. Whether you’re a local small business or a big out-of-state warehouse retailer, the same rules should apply.
Letting the biggest online retailers off the hook for collecting sales taxes makes the marketplace less competitive by driving out small local retailers. And letting big out-of-state retailers avoid collecting state and local taxes also hurts communities like my hometown of Sparks, Nevada.
Local stores have proven that we can compete if given the chance. Not only that, we also create local jobs and support local charities and community events. When someone buys something from a neighborhood brick-and-mortar store, that money goes toward paying local salaries and local utilities. It pays local vendors for their help keeping local stores in business collecting local sales taxes. That money goes on to pay local plumbers, accountants, consultants and other retailers in the area. It’s the money we use to pay for our employees’ healthcare and educate our families, supporting the people in our community who deliver these essential services.
When a customer comes to Bag of Bones, a dog store we founded in Sparks, Nevada in 2004, they find a wide variety of dog food options. Pet owners today enjoy an unprecedented selection of specially formulated dog foods for dogs almost any size, shape and age. That selection can be intimidating to new pet owners. That’s why our store gives customers the benefit of a knowledgeable staff to help them find what they need. And when they shop in-store, they get the added value of supporting their local economy and local public services with each purchase.
Now let’s imagine that same customer decides to visit one of our out-of-state online competitors instead. The customer might find many of the same bagged and canned dog foods, but not the locally-made treats we sell at the register. Having gotten customer service previously from our staff, they already know what they want to buy, but they miss out on the conversation that teaches them something new about pet ownership. Not knowing what they’re missing, the customer adds the dog food to their shopping cart. Many online stores already offer free shipping already, and most are not required to charge sales taxes even though customers still have to pay them.
That customer checks out thinking they got a discount in the amount of the sales tax. But that difference in the sales tax is money that no longer goes to pay for state and local services. And since the online retailer is based out-of-state, that money flies off to New York or California, never to return to Sparks. The customer gets no local reinvestment value from their purchase and now has the added responsibility of calculating and sending their sales tax payment to the state on tax day. All because a large out-of-state retailer didn’t want to install some simple tax collection software or have to compete on a level playing field with local retailers like me.
I would love to see this loophole finally close in 2014. Free markets mean better prices, better service and better selection for consumers. They keep the government from micro-managing the retail marketplace by picking who wins and who loses. And even the biggest internet retailers headquartered all the way across the country will still benefit from our strong local economic growth. It’s a win-win for everybody.
Kim Hunter is the owner of Bag of Bones in Sparks, NV.