E-fairness Main Topic at Recent Meeting of Council of State Retail Associations

As state budget deficits continue to balloon and online sales are projected to continue double-digit growth, the issue of sales tax equity for Main Street stores continues to grow in importance. E-fairness was major topic of discussion at the recent annual meeting in Denver, Colorado, of the Council of State Retail Associations, attended by 37 state associations.

ABA CEO Oren Teicher attended the meeting, and on Sunday, August 15, he was part of a panel discussion on “State Hot Topics” that examined the issue of Internet sales tax equity, and which had approximately 115 attendees. The panel was moderated by Tim Phelan, president of the Connecticut Retail Merchants Association, and participating on the panel with Teicher were Chris Howes, president of the Colorado Retail Council, and Jim Sherin, president and CEO of the Retail Council of New York State. ABA has worked with all three of the retail councils to advocate on behalf of sales tax equity [1], and New York and Colorado have passed e-fairness legislation.

In his remarks, Teicher said he believed “there are two clear points for any discussion of this issue.” The first, he noted, was that “the problem of uncollected sales and use tax has grown to staggering proportions,” pointing out that even as state budget deficits continue to widen, “the gap between online sales and uncollected sales tax is only going to grow,” with the 2009 e-sales of $155 billion slated to grow by 11 percent this year.

“The second important point of agreement among all of us,” Teicher said, is a belief that it is not the role of national, state, or local governments “to pick winners or losers among retailers” or to inadvertently subsidize any one competitor. Instead, “retail success or failure should be determined by a business’ entrepreneurial skills and strategy,” he said. Currently, however, some major online retailers are refusing to collect sales tax, and by “giving them a pass,” Teicher noted, “taxing authorities have helped create a huge disincentive for consumers to shop at Main Street retailers.”

Noting the there are currently efforts on both the federal and state level to achieve sales tax equity, Teicher reiterated that “we at ABA have supported a national solution from the start,” adding that 11 years ago he had represented ABA at an Advisory Commission on Electronic Commerce meeting and that ABA had been a founding member of the original E-Fairness Coalition. Most recently, in July, ABA wrote Rep. William Delahunt (D-MA) expressing support for his Main Street Fairness Act -- which would authorize the 24 states that are part of the Streamlined Sales and Use Tax Agreement (SSUTA) to require remote retailers to collect and remit sales tax on orders in their state. In addition, last month ABA urged its members to support the legislation. “If a fair and effective national solution to sales tax inequity can be passed, it would be a great achievement,” Teicher said.

However, Teicher also stressed that ABA would continue to work with “a growing coalition of retailers, associations, and others” to advocate for the passage of state legislation that would clarify existing laws “to ensure that online retailers with a network of affiliates in the states” collected and remitted the required sales tax. He noted ABA’s belief that the passage of legislation in such states as New York, North Carolina, and Rhode Island supported a national effort and that by furthering the debate in other states the advocacy efforts “highlight the issue, build effective coalitions, and focus the attention of elected officials in Washington,” all of which help the prospects of passing the Main Street Fairness Act.Teicher noted that victory on this issue would require a broad and active coalition. “Booksellers are contacting state and federal elected officials to urge them to enact sales tax equity, they are testifying before state legislators, and they are working in their communities to build collations among their fellow businesses,” he said, “but they can’t carry the fight on their own.” Teicher encouraged the state retail associations to carefully consider the issue of sales tax equity, and he concluded by noting “the more of us that are working for solutions on both the federal and the state level the better. I hope that we can do much more to work together to level the playing field for retailers of all sizes and to get government out of the business of picking winners and losers among retailers -- to make sure it’s fairness and competition that determine who succeeds in the marketplace.”

Following the meeting, Teicher noted to BTW that he was encouraged by the expressions of support for sales tax equity from representatives of several national retail companies.