George Smith (column, “Internet sales tax a terrible idea,” June 20) makes the case that if Gov. Paul LePage and Rep. Chellie Pingree agree on an issue, it must be a bad idea. He also says that perhaps Maine should simply eliminate the sales tax and repeal the requirement that sales taxes are due on out-of-state purchases.

Instead, Mainers should consider some facts about this issue — often called e-fairness or Main Street Fairness.

It is refreshing in today’s hyper-partisan environment to have an issue that LePage and Pingree agree on. This issue is not a partisan issue. It is an issue about fairness, about creating a level playing field between brick-and-mortar retailers and online-only sellers and providing a better means of collection.

I am glad that Smith acknowledges that Maine law requires that Maine residents remit sales and use taxes for online and out-of-state purchases. As we all know, however, a number of Maine residents do not remit the tax on those purchases, which puts them in a difficult spot should Maine Revenue Service ever come calling for an audit.

Maine’s brick-and-mortar retailers pay property taxes and income taxes, employ Maine people, advertise in Maine media outlets and are the first to contribute to the local fundraiser or sports team. They also are required to collect and remit sales taxes to the state.

Online retailers do none of these things.

Advertisement

Some consumers go to brick-and-mortar retailers, ask questions about the product or try it on and then leave, going to an Internet store to buy the product online. This practice is called “showrooming” and is even encouraged by some of the online sellers.

One seller even gave their consumers an additional 5 percent off if they went to a store, scanned the item’s barcode with a telephone app and then made the purchase online.

Many retailers can match or beat the sales price of an online seller, but they cannot avoid collecting the sales tax. The sales tax difference is enough for many consumers to choose online over brick-and-mortar retailers. Strong competition is a basic tenet of retailing, however, the competition needs to be fair for all players.

The Maine Merchants Association and the Maine State Chamber of Commerce commissioned a study that estimated that Maine loses $19 million to $24 million in revenue that is not being collected. To level the playing field, online retailers should also collect and remit sales taxes as brick-and-mortar retailers do.

Maine can address e-fairness in a few ways. First, LePage recently signed an executive order forming an E-Fairness Task Force to examine how other states collect that lost revenue, and what Maine can do legislatively in 2013 to address this inequity.

Maine can enact legislation that would require the large, online sellers to collect and remit the taxes. This legislation has been passed in a number of states over the last couple years, with New Jersey being the most recent state to do so.

Advertisement

Equally important is the action that can be taken in Washington, D.C., by Maine’s congressional delegation. Pingree supports the Marketplace Fairness bill and is a co-sponsor of the legislation.

In his column, Smith didn’t mention that a key provision of that bill is an exemption of $500,000 in online sales for small sellers. Our association has supported as large an exemption as possible.

Another way Maine could address this issue would be to change the law and eliminate the requirement that Maine brick-and mortar-retailers collect and remit sales taxes, too and instead put the requirement on Maine residents.

Of course, that suggestion is laughable as is Smith’s idea that Maine eliminate the sales tax altogether. I think all Mainers would love to see Maine’s sales tax eliminated, but it simply is not going to happen.

Instead, Maine can and should take action to create a level playing field and require large, online sellers to collect and remit the sales taxes just like Maine retailers currently do.

Curtis Picard of Topsham is the executive director of the Maine Merchants Association, Maine’s retail trade group.


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: