By: Gordon Gough
Ohio Council of Retail Merchants
The U.S. Senate deserves a lot of credit, particularly Ohio Sens. Sherrod Brown and Rob Portman, for passing the Marketplace Fairness Act, a bill that would significantly help Ohio’s retailers.
This state has always had a strong retail presence, from established stores with a national reach to the mom-and-pop businesses that are the backbone of our local economy.
However in recent years, the industry has suffered tremendously from an inequitable tax code, which has made it harder for hometown stores to compete. Ohio retailers are at a competitive disadvantage because these outdated tax policies have established winners and losers in the marketplace.
While our local retailers collect sales taxes every day, out-of-state, online-only retailers are able to avoid collecting and remitting these taxes, despite the fact that they are still legally owed by the consumer. They are able to do this thanks to a Supreme Court decision made more than 20 years ago in 1992, before e-commerce was even a blip on the radar screen in the retail world.
Now, however, online shopping has become an economic powerhouse. There is no reason for online-only retailers to receive special tax treatment from our government. This disparity has put many of our Main Street retailers out of business and has others teetering on the brink of bankruptcy.
Ohio business owners aren’t afraid of competing with online stores; in fact, many of our members sell on the Web. What they can’t stomach is unfair tax treatment that essentially penalizes them for maintaining a physical storefront and following the rules. Online-only retailers are often able to undercut local businesses’ prices because of this lack of tax parity.
Too often, consumers will research a product at a brick and mortar store only to go home and buy the product online to avoid the sales tax. This devastating practice, known in the retail business as “showrooming,” is just another nail in the coffin for Ohio businesses, and it’s a prime example of why local retailers need a level playing field.
Fortunately, Ohio’s state legislature, mirroring the federal action, is taking a bold step in the right direction toward making our nation more hospitable to local, brick-and-mortar businesses. The Ohio Senate is currently debating the state’s budget bill that includes a provision to treat in-state stores and Internet or mail-order retailers equally.
Perhaps even more significantly for Ohio taxpayers, the additional funds the state would collect from this enforcement and other budgetary maneuvers would give the state the ability to lower personal income tax rates.
The income tax rate in this state is in the top third of the nation — a figure that frightens off many prospective investors. Lowering income taxes would help retain and attract new businesses, spur investment, and create more jobs.
But before the state of Ohio can act, Congress has to give states the authority to collect the taxes that are currently due.
The bill has passed the U.S. Senate with bipartisan support including a number of the Senate’s top Republicans and has moved to the House, where it will hopefully be met with similar support.
Ohio’s retailers are proud to stand with the General Assembly, Gov. John Kasich, and Ohio’s senators to support this “e-fairness” legislation. We hope that all parties will work together to finally level the playing field for all retailers. When they do, our economy and wallets will benefit tremendously.
Gordon Gough is executive vice president of the Ohio Council of Retail Merchants and chairman of the Alliance for Main St. Fairness in Ohio.
Posted in limaohio.com
Sunday, June 2, 2013