Letter: Reform must address the e-tax fairness

The issue here is simple. The Louisiana state government requires in-state businesses to collect sales tax at point of sale, but does not require the same of their online competitors based out of state.

In other words, our state government is directly responsible for putting Louisiana businesses at a 4 percent cost disadvantage to their online competitors, a number that rises to as much as 9 percent once parish sales taxes are factored in.

This distortion has hurt Louisiana businesses. Indeed, a 2013 survey of independent businesses reported that more than 80 percent of business owners say “showrooming”— when a customer enters a store, browses its selection, solicits advice from employees, then leaves and purchases the item online — is affecting their business.

Gov. Bobby Jindal’s tax reform proposal suggests that lost revenue from eliminating corporate and personal income tax will be made up by increasing other taxes, such as raising the state’s sales tax to as high as 7 percent, pushing total sales taxes to as high as 12 percent. Such an increase would only make the price difference between Louisiana businesses and online vendors more apparent, driving even more residents to purchase items online. Louisiana businesses would suffer, and public services that rely on sales tax revenue — education, public safety — would take yet another hit.

Gov. Jindal has repeatedly opposed requiring online vendors to also collect sales tax, labeling it a “tax increase.” Yet in a speech to the RNC last month, Gov. Jindal argued: “Government must pursue a level playing field. At present, government is the un-leveler of the playing field.”

Jindal’s continued opposition to e-tax fairness is perpetuating an un-level playing field that is hurting his own state’s economy and depriving the state of properly functioning competitive markets.

Jindal now has an opportunity to match his words with actual policy. Require out-of-state online vendors to play by the same rules as their in-state competitors and end this unnecessary issue once and for all.

Mark Strella, project coordinator

Greater New Orleans’ Independent Business Alliance

New Orleans

Comments

1) Comment by Attila - 20/02/2013

Guess who has signed on to this train wreck? None other than our senior Senator "Katrina Mary" Landrieu. I guess her low information voters won't have a problem with it as they probably don't know how to use a computer to shop on line in the first place.

2) Comment by tradewinns - 19/02/2013

how is the state of la. going to know i purchased something from alabama unless the company wants to play nice. i prefer to save the money, it's the only break i get as a middle income class citizen. the poor don't pay unless they are paying with the middle class's money and the rich will just bring it back on their next jet away weekend.

3) Comment by SuzanneMS - 19/02/2013

Didn't have to go to the mall -- didn't have to worry that it was "out of stock" -- or they don't have the right size or color. I order plenty online from stores that have local branches in this area so that I can get what I want without driving all over town for it or going back over and over, which means that I pay sales tax on it. I'll even have it shipped to the store (no shipping charge) and pick it up when it gets there. Local small businesses could take a page from that book.

4) Comment by Mygulfbleedsforu - 19/02/2013

Apparently a federal bill has been introduced. The Constitution gives Congress the authority to regulate interstate commerce but Congress has never cared to regulate this issue before. Maybe now... http://www.businessreport.com/daily-report/AM/2182013/Federal_bill_would_make_online_retailers_collect_sales_taxes#axzz2LNehbjkw

5) Comment by Attila - 19/02/2013

It has been my experience especially with Amazon and EBay that when they offer "free shipping" on an item the cost of shipping is included in the price of the item...there is no free lunch....and there is no free shipping.

6) Comment by nimby? - 19/02/2013

most important , didn't have to go to the mall . if you order online with a company doing business in your state you will pay taxes on the purchase . however , since there was no delivery charge I tipped the delivery guys the amount delivery would have cost . they were happy not having to split it with the store ...

7) Comment by DMJ - 19/02/2013

"I bought a washing machine on line , cost less..." Exactly.

8) Comment by nimby? - 19/02/2013

I shop locally , when I can , if what I need is available . however , with the demise of customer service , that I can have exactly what I want delivered to my front door , at less . I'd pay more for the convenience . it wouldn't hurt for some local businesses to improve their product control , customer relations . I bought a washing machine on line , cost less , no delivery charge , didn't have to go to the mall , just sayin' ...

9) Comment by Mygulfbleedsforu - 19/02/2013

The state can't just decide to reach out and make an out of state business collect its taxes. This is a battle that has been going on for many, many years. It's a US constitutional issue.

10) Comment by DMJ - 19/02/2013

I'd be in favor of requiring online vendors to remit sales taxes. Maybe shipping companies would suffer, but local retailers would benefit. Inefficiency means more jobs, after all. If they did this, and only eliminated income taxes for businesses (but not for individuals), I'd say this would be a successful compromise. It would keep state revenue high enough to fund the government, it would prevent the shifting of the cost of government to those with less money and it would take the wind out the argument that Louisiana isn't attracting businesses because of business income taxes. Plus, it would keep local sales taxes where they are, an already high 9+%.

11) Comment by Attila - 19/02/2013

If the feds and/or Lil Booby succeed in taxing internet sales there will be unintended consequences. Millions of jobs are at stake in the delivery business (UPS, FedEx, and trucking delivery). There will also be casualties in warehousing, and administration. I understand that local retailers feel like they are at a disadvantage, but by the time people pay shipping charges on internet purchases it eats up most of the savings. I will urge my federal and state reps to vote no to this money grab.

12) Comment by swinham - 19/02/2013

Since he admittedly has no plan beyond elimination of income and franchise taxes, it is fruitless to discuss what, if anything, the governor will propose in tax increases to balance the loss - my guess is nothing. Mr. Strella has reminded us of one of the many odd positions the governor has taken on taxes, i. e., that the EXISTING law on this issue (see jwfiero post) should NOT be enforced because doing so would result in a tax increase. Now, he seems to support legislation that would make actual collection of internet sales taxes a practical possibility. The governor can float any such ideas he wants to, but only the legislature can enact laws to make them reality. He can, at will, get in front of the parade on popular bills and fade into the background on unpopular ones.

13) Comment by jwfiero - 19/02/2013

In theory, the problem of taxing online sales was addressed in an old law requiring that Louisiana citizens who purchase items from catalogs and more recently from online vendors must pay an 8% "consumption use" tax to the State. If that tax is not paid monthly, it must be paid when filing the State income tax. That system requires the purchaser to determine what is owed, which means each person must know what is and what is not taxed plus be a fair accountant. Furthermore, 4% of the State consumer tax goes to the parishes. Do we even know how that 4% is distributed? Is it equally distributed to every parish (which would be a big ripoff of parishes with large urban populations), or is it distributed on the basis of the consumer's place of residence? In any case, the seller should be the collector of what is obviously a sales tax under another name. In any case, Mark is right. The online merchants must be required to collect sales taxes for each state even if they have no physical business in a state. I would bet that as the law now operates in Louisiana, it is very inefficient and virtually impossible to monitor. How many people keep those kind of records?

14) Comment by SuzanneMS - 19/02/2013

And if he does push through his repeal of income taxes, it won't just be books and electronics that people buy online. Amazon sells a wide variety of non-perishable foods and will even set up a regular delivery of them, with no shipping charge in most cases.

15) Comment by ScotB - 18/02/2013

Amen, Mark. To most rational people, this is just common sense. It is estimated that Louisiana is losing half a billion dollars in revenue already from not requiring online retailers to collect sales tax, as brick and mortar retailers must. Online retailers provide no Louisianians jobs, either. Or support local charities and civic organizations. Or pay property taxes, business license fees, etc. This is why a national version of adjusting this was called "The Mainstreet Tax Fairness Act".