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Potential New Sales Tax for Online Shopping

Posted: Nov 7, 2013 7:50 PM by Andie Lowenstein, KOMU 8 Reporter
Updated: Nov 7, 2013 7:50 PM

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COLUMBIA - When shopping online, you may almost never see a sales tax. However, that may be changing.

The U.S. House of Representatives may consider the Marketplace Fairness Act (MFA) which, according to state Department of Revenue estimates, could potentially bring in $845 million in additional sales tax revenue to state and local governments from 2015 to 2017. That's if the bill passes before the 2014 holiday shopping season, but so far lawmakers have not scheduled a vote.

The legislation passed the Senate in May by a 69 to 27 margin. Early October, U.S. Representative Bob Goodlatte released a set of seven principles to provide framework for debate. He wants to ensure the Internet sales tax will be fair for both online businesses and traditional ones.

Currently there are 24 states that have the sales tax in place. According to Matt McCormick, President of the Columbia Chamber of Commerce, the other half of the states that don't have it, including Missouri, "are making a big push to try to get this taken care of because it is such an important thing for our cities and for our local governments."

A 2013 analysis from the National Conference of State Legislature says Missouri is missing out on approximately $430 million.

Those who favor the online tax approve of putting online retailers on the same playing field with brick-and-mortar stores.

Elly Bethune, owner of Elly's Couture in downtown Columbia, says the amount of online purchases through the store's website has increased over the last couple years. Currently, about 20 percent of the store's sales are from online purchases. Bethune isn't worried about a sales tax affecting business.

"It's kind of like your sales tax when you're at a store and you purchase something, You're not always looking at the sales tax." Bethune said. "If you really want something you're not really noticing the extra tacked on sales tax. I think some people are probably very conscious to it but the majority are not. So I think if they really did want something online they would find a way to purchase it."

She says if consumers are upset about an online sales tax, there are things business owners can possibly do to counteract it such as offer free shipping.

"We ship a lot, like a lot to Canada so I would hope that would not interfere with something like that because at the end of the day you're in business you're trying to make sales so I would just try to keep the customer as happy as possible and see what we could do to still make the sale happen."

According to McCormick, one of the challenges of the sales tax bill is the different tax laws in each state. "Some states they have a cap that across the state it doesn't go any higher than X amount of percentage. In Columbia, depending on where you shop depends on what the sales tax is." He says the sales tax laws would have to be simplified so that an online shopper can plug in their zip code and the sales tax for their area would be calculated. This would make it easier for the businesses to collect the appropriate tax.

"It's a tax that should've been there," McCormick said. "A lot of people have taken advantage of the fact that it's not. So, you know it's one of those things that everybody would have to get used to, there would be a bit of a process to get through, but everybody would eventually get to where it would just become part of the buying process."

According to a Gallup Poll, 57 percent of Americans are currently against online sales taxes so federal lawmakers will continue discussing ways to pass the bill.

To learn more about the bill, visit the Marketplace Fairness Act site.

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