President’s Message: Alibaba and the Sales Tax Thieves

Over the last year and a half, I have written several messages about the pressing need for passage of the Marketplace Fairness Act. In those messages, I have cited numerous reasons including:

  1. To level the playing field.
  2. The government shouldn’t be choosing winners and losers by providing unfair tax advantages to some.
  3. The taxes are owed so this is not a new tax – just a loophole in the law (which over 98% of people don’t choose to pay).
  4. Lost sales tax revenues are crippling our state and local governments who depend on this revenue and this will only get worse unless this trend is reversed – either services will be cut or taxes will be raised in other ways.

Now, you can add yet another reason to the list – Alibaba (a Chinese company larger than Amazon and eBay combined) – recently launched the largest IPO in Wall Street history. The current loophole in the internet sales tax law will allow foreign companies, like Alibaba, to unfairly compete with our U.S. retailers who employ people here, pay taxes here, and have brick and mortar presence here. That is unfair. Watch the latest commercial that is now being run by the Alliance for Main Street Fairness.

Recently, I was in Washington, D.C. with a small group of CEOs representing the International Council of Shopping Centers. We met with key members of Congress to urge them to pass Efairness legislation. This ICSC article offers more details about our meetings.

The good news is that they are listening, but we need to continue to have our voices heard. This link offers an easy method to take action by phone, email or tweet. I encourage you to contact your members of Congress today.

0 Comments

  1. People talk about “showrooming” at a shoe store. It’s happens, yes, but not as often as claimed and not for the reasons claimed.
    When I shop for shoes in a store I am never satisfied by the staff. They rarely have the expertise or experience I need to make an educated purchase. So, I have to go online, research, get reviews, watch videos, etc. Shoes are expensive. I can’t afford to make a wrong choice eat $100+
    Sure, I want a good price, but I’ll pay more to make sure I’m making the right choice.

    So, if you want to combat online sales in shoe or any other store, educate yourself and your staff. I WANT to buy local. I usually try local shops first. Often times, they are not equipped to meet my needs and I don’t think an online company should be forced to collect tax for every single state if they are just residing in one.
    I do think it’s OK for online retailers to collect tax on every purchase, but they should only do 1 rate and 1 audit for 1 state.

    Musicians and artists like me who LOVE mom & pop record stores still hate this bill. It will hurt Mom & Pops by giving more power to big retail (the sponsors of the bill). It’s sad that some m&p’s don’t see that.

  2. Online sales tax will be collected for the states where shoppers live…most often for tax jurisdictions of big cities. MFA is a big F-U to small towns as much as it is to small businesses who can’t afford to pay for services that don’t generate sales and take people from their current jobs to become tax experts and data preppers. The govt software only helps if the company has a supported cart system (not likely in most cases) and data is prepped properly and much of that is done by judgement call… hello audits!!! goodbye small business owners!!!
    This is quite different than the way it’s currently done at the brick/mortar level. And big retail lobbyists have noted that intend to kill the $1mil exemption in the bill and extend the law to brick/mortars in the future.

    Ever heard the story about the poisonous snake that’s looking for lift up a mountain? He promises he won’t bite you and he’ll protect you from predators, but when you get to the top, he bites you anyway. Why? Because he’s a snake…and you should’ve known who he was when you picked him up. Too late now, you’re dead.

  3. 1. To level the playing field?
    These are the things MFA requires of remote sellers but NOT brick and mortars…
    -Govt mandated software. (forcing companies to throw out existing software they use, pay many thousands to implement new software that spies on shoppers, and offer no support for this software that doesn’t support the large majority of shopping carts and business systems in use today. This would cause many to have to create a new website as well.

    2. The government shouldn’t be choosing winners and losers by providing unfair tax advantages to some.
    Senator Mike Enzi (sponsor of the bill) said on the floor of Congress that only .04% of remote sellers are living in this “loophole.” http://www.c-span.org/video/?c4515771/004-remote-sellers-affected-marketplace-fairness-act

    3. The taxes are owed so this is not a new tax – just a loophole in the law (which over 98% of people don’t choose to pay).
    Not true. This is a new tax to the 5 states who don’t collect sales tax today. Businesses in those states would have to, and people buying from those states but shipping the items out of state would have to pay tax as well, for the first time, ever. Also, citizens/businesses in one state have never been subject to a state where they don’t reside. So, this is new as well and against all previous court rulings and interstate commerce law.

    4. Lost sales tax revenues are crippling our state and local governments who depend on this revenue and this will only get worse unless this trend is reversed – either services will be cut or taxes will be raised in other ways.
    There is a case to be made here, but many studies have show that the loss in productivity and jobs due to complicated and expensive and paralyzing compliance and audits will make the law a wash. On top of that, taxpayers will foot the bill for this govt mandated software. (Obamacare website cost over $700 million and didn’t work…how can we expect any different here?)

    5. Anything else you’d like me to refute Marty? Over the last year and a half you have either 1) Not read the law or 2) Not accepted the truth and consequences of the law.

    For anyone reading the half-truths that Marty is spilling out, I’d suggest a quick visit to emainstreet.org (nonprofit, volunteers who don’t ask for money and will tell you the truth.)

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