Would Online Sales Tax Help West Suburban Businesses?

By B.A. Morelli, Patch editor

Senators and business groups are debating the merits of a pending Senate bill that would allow for the collection of sales taxes on items bought online.

The Marketplace Fairness Act would require businesses with more than $1 million in annual Internet or catalog revenue to collect sales tax for online purchases and send them to the state where the buyer resides. A Huffington Post report cites a National Conference of State Legislatures estimate that states collectively lost $23.3 billion in sales tax revenue in 2012 due to online sales.

The U.S. Senate could vote on the bill, which has bi-partisan support and the blessing of President Obama, as soon as Wednesday.

Supporters say the bill would help retailers battle a practice called showrooming, when shoppers survey a store's goods and then buy it from an online competitor. Ad Week cites Placed and Gartner research that 60 percent of customers use traditional retailers to examine items they intend to buy online.

Opponents say it would harm small business by making them tax collectors and "put them in a position of having to purchase software to calculate sales taxes, according to the Huffington Post report.

"The tax is due and there needs to be a method for collection," Kansas state Rep. J.R. Claeys told The Huffington Post. "It is a good step in the right direction. Our Main Street businesses should not be at a government-sponsored disadvantage."

Businesses that have less than $1 million in annual revenue would be exempt from collecting taxes, which is a threshold that some critics say is too low. Phil Bond, the executive director of We R Here, a group dedicated to stopping the legislation, said that most online small businesses operate at a low-profit margin and cannot implement multiple software programs.

Should the measure pass the Senate, some say the House is likely to approve it.

"As it becomes more likely to pass, all of us in the House will be more likely to hear from our local legislators and governors," Rep Peter Welch, D-Vt., said. "Clearly that got momentum in the Senate."

What do you think? Would such a bill help or hurt businesses in the western suburbs?