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Merchant advocates across the country are fighting for sales tax collection enforcement for online retailers like Amazon.com. Currently online-only companies can achieve as much as a 10% price advantage over brick-and-mortar retailers by notifying the buyer to record and pay the tax themselves, instead of collecting state sales tax on their websites.

The Importance of Buying Local

Local businesses are the glue that hold our local economies together! When we buy from local businesses, almost 50% of the proceeds go right back into the local economy. Not to mention the jobs created in our local economies.

Their Solution

Forcing online companies like Amazon.com to collect and pay sales tax for tax payers, instead of educating the tax payer to follow tax laws, or to buy in local stores instead of online retail giants.

“It’s an issue of fairness,” said Virginia Retail Merchants Association’s President, Laurie Aldrich, at a special e-fairness breakfast held by the Lynchburg RMA this morning. “Amazon.com aren’t the only bad guys,” she said, referring to all those companies who are purposefully not collecting sales tax.

Merchants associations and legislators across the country are fighting for bills to be passed on state and national levels that will require online retailers to collect those taxes that are already required to be paid by the taxpayer.

The Internet is Changing Our Culture

The internet is changing everything. Instead of finding time to go shopping we can shop online at work or in class on our mobile devices. Our entire culture is changing due to social media and hand-held technology. There is a vast generational difference between a 19-year-old who wants to send a text message instead of make a phone call, and an 80-year-old who still goes to the post office or salon just to catchup with the people they know.

The core issue is that more and more people are using the internet to shop, instead of taking the time to shop in a local store for what they need. A buyer can go to Amazon.com or dozens of other online giants to get the same products at lower prices, often for free shipping and no sales tax is collected – cutting another 5%.

But there is more to the story – people don’t just shop for better prices, but for convenience and variety. Most local specialty stores are limited as to what they can carry – and they are also limited to the local market and product demand.

The buying cycle has changed – we can now educate ourselves on what products to buy instead of walking into a store hoping someone there will be able to answer our questions. We can lookup product ratings and consumer reviews without fears of being lied to or misinformed by the local workers.

I have a personal conviction to buy local over buying online, but I can tell you first hand the need to buy online is often greater than the ideal of buying from a local selection. A great example is maternity clothing and baby shopping. There are no local maternity stores here in Lynchburg, VA and very few stores carry what I need at an affordable price. I am often forced to find it online or drive to a larger city. And the local help is no  help at all! One of the only local stores to buy baby items is Burlington Coat Factory here locally… but when my husband and I went in to find a newborn car seat, we were given false safety information about one of the more affordable seats, in an effort to get us to buy the more expensive one! Now we refuse to shop at the local Burlington factory.

The economy also plays a role in our spending. The economy has affected the bottom line of hundreds of self-employed workers and has increase unemployment due to layoffs or budget cuts. When we have to change our buying habits altogether, sometimes the best place to get what we need at a price we can afford is Amazon.com!

Will Tax Bills Level the Playing Field Between Online and Offline?

I don’t know that it will. There are vast differences between a brick and mortar business and online-only retailers. Online retailers will still have a competitive advantage through the large numbers of consumers they can reach online, versus being constricted to a geographic area. They don’t have the same overhead, either. Does that mean we should charge them higher web domain and hosting fees to make the playing field level?

And what about local businesses who also have an online store? Does it make it unethical for them to market to consumers in other states, collecting the taxes to pay here in Virginia?

What would happen if people stopped buying from Amazon.com? Would a non-US company then have the opportunity to take the market share they were getting? Remember, people aren’t going to stop buying online.

One thing I love about websites like Amazon.com is that it allows people to buy the same item from multiple sellers, even individuals. It also allows for freedom in the marketplace, for people to be able to sell their items without having to establish a business and pay overhead on it. Craigslist.com doesn’t require sellers to collect sales tax when they trade online, either, does that make them a “Bad guy” too?

Is this really an issue of 5% sales tax?

Doesn’t really sound like it, does it? I suspect it would be more critical to educate the ignorant on why it is important to buy local – what it does for the economy and how it affects each and every one of us.

One gentlemen pointed out this morning that New Jersey stopped requiring sales tax at all and people drive to NJ just to go shopping. Hm, maybe that is a good idea for Virginia?

“That’s a a WHOLE different issue,” Aldrich replied. ” It would be great to get rid of sales tax altogether but what we need to do is stick to these bills that we are fighting for.”

Is it? Is it really a different issue or does it address the exact same problem, plus a slew of other problems that face local businesses today! For example, how much money would it save brick and mortar businesses not to have to collect sales tax for the state? Is that really their job to begin with, to commit their time and money to working for the government because they are business owners? And how much more money might we spend in a store if we didn’t have to pay taxes on items? At least 5% right?

Businesses Will Have to Adapt

Online buying is NOT going away. The best thing that we can do is to adapt to it – put your business online, make sure you are available to be found in Google and by mobile devices, or start an online store.

What if We All Bought Local?

Developing bills forcing people to do things instead of educating them is not a correct course of action.

So, let’s pretend for a moment that we took all that time, money and energy lobbying, and put it towards a buy local campaign instead? That we all rallied together and we didn’t write our legislators for bills that may – or may not – truly impact our stores.

I’m in, who else?

The Lynchburg Retail Merchants Association awarded JailBreak’s marketing director, Jennifer Bailey, with the 2010 “Educator of the Year” Award on January 13th, 2011, for her involvement with the Lynchburg business community in 2010.

The new local weekly newspaper, The Lynchburg Times, recently published an article featuring Jay Kumar’s new blog: http://homefinancingadvantage.com/. The blog was built for Jay, a broker for Advantage Mortgage Group, to help people make better financial decisions.

The blog is featured as an easy-t0-read, local resource about home buying and finances. Read the full article here or see the full issue of The Lynchburg Times here >

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