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House Judiciary Committee Holds Hearing on Online Sales Tax Legislation

July 24, 2012

House Judiciary Committee Holds Hearing on Online Sales Tax Legislation

Shopping Center Industry Applauds Movement by U.S. Congress on the Marketplace Equity Act

WASHINGTON, July 24, 2012 — Today the House Judiciary Committee held a hearing on H.R. 3179, the Marketplace Equity Act, a bill that levels the playing field between brick-and-mortar and Internet-only retailers.  The Judiciary Committee hearing comes on the heels of recent Senate activity on S. 1832, the Marketplace Fairness Act, a similar bill, which was filed as an amendment to a small business tax credit measure.

Today’s hearing on H.R. 3179 highlighted that there is widespread bipartisan consensus on the need to level the playing field between online retailers and brick-and-mortar businesses, and add the Marketplace Equity Act to the list of legislation that will be completed this year. The hearing included statements from Congressman Steve Womack (R-AR) and Congresswoman Jackie Speier (D-CA), the two bipartisan sponsors of the Marketplace Equity Act, and Governor Bill Haslam of Tennessee, a strong advocate for a federal solution to address the sales tax collection issue.

“We are encouraged by today’s hearing by the House Judiciary Committee,” said Michael Kercheval, president and CEO of the International Council of Shopping Centers (ICSC). “It demonstrates that there is real bipartisan desire to close a loophole that allows Internet-only sellers to avoid sales tax collection to the detriment of brick-and-mortar retailers. We urge Congress to act on the growing momentum to level the playing field for all retailers across the country,” added Kercheval.

The hearing featured the following key points:

  • Congressman Steve Womack (R-AR) noted that the Marketplace Equity Act is based on three conservative principles: states’ rights, free market competition and keeping taxes local.
  • Governor Bill Haslam of Tennessee stressed that the discussion isn’t about raising taxes or adding new taxes. It’s about states having the flexibility and authority to collect taxes that are already owed by their own in-state residents.
  • Congresswoman Jackie Speier (D-CA) said that rather than hide its head in the sand, Congress could solve this issue for all states by allowing states to require online sellers to collect tax.
  • Congressman Steve King (R-IA) highlighted a letter written from a business owner in his district, where he states that his online competition is not using their own money to compete with him, rather they are using the state of Iowa’s sales tax money to compete by taking advantage of the 7% difference they can get by not collecting the tax. The Congressman called for a level playing field for all retailers and a stop to this practice of undercutting in-state brick-and-mortar businesses.
  • Congressman Ted Deutch (D-FL) stressed that the online sales tax loophole puts entire communities at stake, and emphasized the ripple effects when a retailer of any size closes.  He cited the jobs lost, that Main Street begins to go dark, community programs lose their sponsors and residents lose the ability to obtain the items they need to survive.

Both the Marketplace Equity Act and the Marketplace Fairness Act grant states the authority to compel sales tax collection on online purchases made by consumers in their state.  It would end the competitive advantage pure e-retailers currently enjoy by not charging sales tax and modernize the sales tax system to better reflect the realities of the 21st century marketplace.

ICSC has promoted sales tax fairness for over a decade, advocating that a “sale is a sale” regardless of whether the purchase takes place on Main Street, at shopping centers, via mail-order or over the Internet.  For more information about sales tax fairness and how the current sales tax system is unable to support the 21st century retail marketplace please visit www.21stcenturyretail.org.

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