Trade Groups Call on Governors to Follow New York State's E-fairness Example

Associations call on non-New York State businesses to contact their governors

Seven independent trade groups joined together this week to continue their efforts on behalf of e-fairness. In a letter to each of the governors in the 44 states other than New York that collect sales tax, the groups cited the Internet Sales Tax provision in the New York State budget -- which will require out-of-state merchants that have clear nexus in the state to collect and remit sales tax -- and asked state governors to follow New York's lead by clarifying their own existing sales tax laws.

Though Amazon.com is challenging the New York provision in court, the company announced that it would obey the law and begin collecting and remitting sales tax as of June 1. The independent trade groups are also asking member businesses in the 44 states that collect sales tax to write their governors.

"Lost revenue from uncollected sales tax isn't confined just to New York -- it affects every state where sales tax is collected," said ABA COO Oren Teicher. "Hopefully, the governors in those states will acknowledge the gravity of this issue, see how New York State has approached the issue, and follow the state's example."

In their letter to the governors, the groups -- the American Booksellers Association, American Specialty Toy Retailing Association, the Coalition of Independent Music Stores, Independent Florist Association, Independent Office Products & Furniture Dealers Association, North American Retail Dealers Association, and the National Bicycle Dealers Association -- noted that states are faced with a daunting challenge: how to balance the budget at a time when costs are increasing and revenues are in decline.

According to the National Conference of State Legislatures' State Budget Update, some 23 states are faced with projected budget shortfalls for fiscal 2009; at least 16 states are expect to reduce spending or eliminate programs; and eight are considering tax increases, as reported by Stateline.org. Moreover, 16 states reported that their general sales tax collections fell below projections, and in nine of those states collections were failing to meet reduced estimates. In addition, 12 states indicated that personal income tax collections would not meet projections, and 16 noted that their corporate income tax collections were below expectations, the article noted.

"These numbers are only going to get worse if states continue to subsidize out-of-state businesses by allowing remote merchants with nexus in the state to skirt existing tax laws," the trade groups wrote, "thereby letting millions of dollars in sales tax revenue go uncollected. As online shopping grows, more and more consumers will eschew locally owned businesses for the tax-free shopping offered by out-of-state online retailers." (Read the full text of the letter.)

In addition, the trade groups are calling on member retailers in the 44 states where sales tax is collected to write, fax, or e-mail their governors about this important issue.

"With their winning efforts, New York State booksellers and independent retailers proved yet again that the most persuasive voice in support of this cause is that of a constituent," Teicher said. "The victory in New York changed the context of the debate and bolstered the fight for e-fairness elsewhere, and provided our national campaign with great momentum. So, the time to act is now, which is why we are urging our many members in the 44 other states that collect sales tax to write their governors today."

To make this communication easier, ABA has prepared a template letter that can be adapted and sent. The association asks businesses that contact their governors to send a copy of the letter to ABA Public Policy Liaison David Grogan at dave@bookweb.org. --David Grogan