Businesses, states and local governments would benefit

The Marketplace Fairness Act, a bill introduced into the U.S. Senate last week, might be the answer states have been looking for to collecting sales taxes on goods sold over the Internet.

And, in a historic first, Amazon.com is backing the measure.

Sen. Mike Enzi, R-Wyo., is one of the leaders of the group of five Republicans and five Democrats who sponsored the bill. Other leaders are Sen. Dick Durbin, D-Ill., and Sen. Lamar Alexander, R-Tenn.

Enzi said existing law costs state and local governments about $23 billion annually in lost revenue from sales tax.

While brick-and-mortar businesses in Wyoming and many other states are required to collect sales tax on goods they sell, Internet vendors with no physical presence in the state face no such requirement.

That gives an unfair advantage to Internet vendors over owners of businesses that are located in Wyoming, say Enzi and other proponents of the bill. Not only do they not have the administrative task of collecting and forwarding the tax, but their customers end up paying less because they don’t collect the tax.

That does not mean it’s not owed. Existing law requires residents of Wyoming and other states to pay sales taxes voluntarily for goods they purchase over the Internet. But, to no one’s surprise, virtually none of us do.

Calling the bill a “win-win resolution,” Amazon Vice President Paul Misener said the company plans to work with Congress, retailers and states to get the bill passed.

“It’s about closing a tax loophole,” said Sen. Alexander. “It’s about stopping the subsidization of some businesses over others.”

On the flip side, eBay says many of its small member vendors would lose a crucial edge in price over big retailers.

However, the bill would not apply to vendors with annual sales of less than $500,000.

The Marketplace Fairness Act would leave it up to states whether to tax Internet sales, as long as they meet minimum requirements for administering those taxes.

The measure, if passed by Congress and adopted by states, would help restore revenue lost to state and local governments through untaxed Internet sales over the past couple of decades.

The bill is supported by the Wyoming Taxpayers Association and by Wyoming state officials who have been working with other states for more than 10 years to resolve the Internet sales tax issue.

However, the measure undoubtedly will not be greeted enthusiastically by many who are happy to not pay sales tax for purchases over the Internet, and that’s understandable.

But it also is important to remember that, as of 2006, Wyoming no longer collects sales taxes on groceries, and that loss of revenue also has hurt local governments, including Park County and the city of Powell. This is one way to restore some of that revenue while evening the playing field between brick-and-mortar businesses and Internet vendors.