Retailers Call for Amazon Tax

Several top retailers, including Best Buy, Walmart and Target, are engaging in a nationwide campaign to require and other online retailers to pay sales taxes.

According to the Wall Street Journal, the group is called the Alliance for Main Street Fairness.

The campaign is targeting states with budget deficits which are seeking new revenue. Small businesses are involved with the effort as well.

Amazon recently cut loose its Illinois affiliates after that state passed an Internet sales tax.

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  • http://Alan Alan

    Consumer electronics internet sales are booming; the customer experience at Amazon and others are the highest in the retailing/etailing consumer electronics industry. With competitive pricing, peer reviews, a no-hassle experience (that is no extended service contract dissertations and half-truths, no forced optimization services, no no-stocks on advertised items, no excess waiting at check-out, no product misinformation, no legal trials at customer service over physically damaged products), of course the mainstream retailers will do anything to attempt to alter the Amazon business model. Based on current trends, your collective traditional business models will become obsolete. Adapt or be gone.

  • http://pete pete

    First I hate taxes of any kind. The fact remains a consumer is penalized 5-8% for buying the exact same thing they can buy on the net at a local brick and morter store. Plain and simple internet retailers need to collect local sales tax.
    Here’s the irony. People buy on the net avoiding paying sales tax. The customer has screwed the government out of their tax. But, as the saying goes, there’s no such thing as a free lunch. Because the local and state governments don’t have any money they raise taxes of all kinds. Property taxes, users fees, etc. pop up up like crazy…and people wonder why the local and state governments are broke. People bitch and moan about service cuts, but guess what each person that avoids sales tax has caused some of the pain. Ultimately everyone pays.
    Face it people are only thinking about today and not thinking long term when they buy on the net. The net has destroyed millions of jobs (think no more CC, Tweeter, Bernies, Ultimate, etc.). Those chains had their issues but selling goods at huge discounts, sometimes below cost, is not a recipe for staying in business. Some of those people are now out of work collecting unemployment (taxes pay that benefit as well).
    Bottom line: when local services, social services, and long terms benefits are cut please don’t blame the Dem’s or Repub’s, or Cheney/Bush, or Barney Frank or Obama. Take a long look in the mirror…by avoiding paying sales tax for short term savings, how does it feel to put your neighbor out of work?

  • http://stagerlee stagerlee

    This is great. Amazon is single handedly destroying the consumer electronics business .

    First of all, they drive down price on product because they do not care about the profit in selling the sku itself. Since all of their affiliates on the site have to pay them 6% to 8% commission. So they drive the product down to cost or below under the BS that they have to automatically match Joes Garage price. Once they do that legit retailers like J&R, 6th Ave, Beach Audio, ANT online etc… have to match and once they do they then sell at cost only to pay Amazon the commission on the sale. In the long run being on Amazons site will be the demise of any of these companies as Amazon drives them out of business.

    Secondly, with the advent of smart phone shopping people are standing in stores whether it be Best Buy, HH Gregg, Frys etc…. and scanning the item with their phone, looking at price on line and saying , match this or i walk. If Amazon now has to include tax and also shipping on some items as many are free. Their advantage will be reduced and electronics retailers can maybe survive. As the other poster mentioned Bernies. Ultimate, Tweeter , Good Guys, Sun TV , Comp USA, Circuit City, rex TV , The Wiz, Tops and more would still be around but its not because they were selling below cost it is because their overhead is much higher than Amazon /etail and they cannot compete with the way the industry is currently run. Tweeters prices as an example were the opposite of below cost. They were always too high on all items and couldn’t sell anything

    Soon you will not be able go compare TV viewing , listen to speakers,or touch and feel and pick up a camera etc….If we continue to let Amazon have an unfair advantage this is where it is heading. I say levy an internet tax the twice as much as you tax retailers and level the playing field.

  • http://MikeC Mike C

    I agree with Alan’s post below. Consumers are sick and tired of footing the bill for all the misappropriation of state funding. Especially in IL!! Walmart is not innocent in the way they treat their employees, either. No benefits, work only 29 hours so they don’t have to offer benefits, etc. Also-customer service from these box stores, even online, is horrendous. The worst experience I ever had buying on the web was from walmart. They entered my address wrong and couldn’t change it in their system after I received the receipt to review. They told me to contact UPS. The mom and pop Internet stores bust their butt to make a sales, they have a built-in review process with Amazon to keep them accountable, etc. The government needs to leave the Internet alone!

  • http://NanE.Stone Nan E. Stone

    Kind of ironic, considering all of the unfair and illegal and morally deficient practices a certain company has engaged in through its years of operation!!!

  • http://RobertMoldaner Robert Moldaner

    Its about time! For all you people that buy online to avoid sales tax: You don’t know how many times we get people in our family run brick and mortar camera store who clearly state, they just want to handle and get the feel of the item before they buy. What is that? Am I supposed to be a showroom for Amazon? I don’t think so. Or would you rather I charge you $25 for each camera I take out the case and show you.

    As someone mentioned earlier, there’s no free lunch. For instance, there’s no one left in New Orleans except us that sells film and photo paper. In fact, there’s only 3 stores left in town. But, when we stop carrying it, everyone’s going to wonder why they can’t get photo paper any more. In the end, its a business. And if you don’t support the local guys (not talking Best Buy, etc), we won’t be here when you really do need us. Think about it.

    Regarding Mike C.: You’re not footing the bill for misappropriation of state funding. Where the heck do you think the money comes from to fix roads, maintain street lights, police and public transportation? SALES TAXES, fool. And when you buy online, you not only undercut your own safety, security and quality of life, you put you neighbor’s out of work. This means they have to draw unemployment, or welfare, etc, which draws more of YOUR precious dollars.

  • http://Steve Steve

    Each and every consumer who purchased their electronics on line will one day face their worst fear. They will experience a problem with something they’ve purchased (say, six months down the road), and they’ll have to give ‘ol Haji a call. As a custom audio/video integrator, that’s when I laugh the hardest!

  • http://Steve Steve

    Under the current federal tax laws, a business has to have a “nexus” – some type of brick-and-mortar presence (retail store, distribution center, etc.) within a given state – in order to be forced to collect sales tax for shipments to customers within that state.

    Although almost every state (even Texas, which has no state income tax) has a law on the books requiring consumers to declare out-of-state (online) purchases and pay the state an amount equal to the tax rate had the item been purchased locally (state, county and city taxes). Needless to say, since state revenue offices do not have the budget or access to purchase records to enforce this, it’s essentially a toothless, ignored law.

    Amazon has thrown its weight around on this. When the State of Texas demanded sales taxes from Amazon based on the fact they had a distribution center near Fort Worth, they promptly closed the center and out 300 people out of work. Since there are still several states without a sales tax, it would be easy for Amazon to locate all of its “nexuses” in such states.

    Having worked in retail management for over a decade, I cannot count the number of customers asking me to “price match” the sales tax savings from Amazon, NewEgg, etc.

    The ONLY viable way to fix this would be for the Internal Revenue Service to impose a flat-rate VAT (Value Added Tax, similar to those in Canada and Europe) on ALL Internet orders (including eBay, where billions of dollars of tax-free new products are sold annually). At the end of each quarter, online merchants (or, in the case of eBay, having the VAT added to the selling price and collected by eBay) must report gross sales revenues by state to the IRS along with payment of VAT tax collected. They revenue would then be distributed to the states. If this flat tax were set at an average of all state sales tax rates (say, 5%), it might level the playing field.

  • http://JWJarvi JW Jarvi

    In response to what Alan said about about adapt or be gone, he is partialy right however saying ” we are just as good as someone else” and buy the way because you dont pay sales tax so you instantly save 10% proves again that the loop hole in tax law is your gimmick. Yes online is great for alot of items. Watch out for potholes and make sure the Fire Fighters get paid before they plan to come over and put your fire out.

  • http://DCMartin DC Martin

    In a economic system such as the US of A’s…We should NOT impede the trade between the states with an ‘internet tax’. The federal regulators of the current administration are currently doing enough of that. We as businesses need to be able to market our products to all the markets available inside our own borders. The internet should not be used to fill the coffers of those states who cannot manage their own internal taxes.
    I as a wholesaler and distributor should not be burdened with the additional red tape of any other state than the one my products are warehoused for distribution from.
    but As a retailer, I am to collect sales or use taxes for those states other than the one I am located in
    The mass marketers such as best buys, walmart, target etc.. would love to do this, as it would impede their competition and drive them out of business with unnecessary bookkeeping and regulations. For when allowed, more states will see this as a way to gain more revenue from other businesses from other states than their own. Be it a 1% or 4% or any %. This no more than holding businesses hostage through blackmail from a domestic market that has always been available to all US Businesses.

    This is clearly another attempt to infringe upon free trade between the states. I for one am in support of those business that clearly define their internet presence and do not allow specific states to ‘blackmail’ them out of those markets. one instance I recently found, was a customer of mine who received an email reply that stated that they could no longer supply a buyer in one of these specific states due to additional taxation from the buyers state. Should they have questions as to why, they should contact their states department of revenue. This seller also went on to thank his customer for their past business and that should the situation improve they would welcome them back.

    Blackmail is the ugly word, it’s not politically correct. But it is the truth. Besides the states, this will allow some white house czar to add their own version to an already overtaxed system.

  • http://Johnson Johnson

    Every online or brick retailer should collect and pay taxes. It’s just the right thing to do.
    As for store retailers, they need to somehow charge people some sort of fee or membership like costco for example to offset costs of non-customers using their stores to see what they want to purchase online. For example $5 to get into store but $5 credit towards a purchase. Thus might not be a good idea but it’s a possible solution.
    As for consumers, the day might come when they no longer can touch and feel before going online to buy. If that does happen, it will raise the cost of business for online retailers and manufacturers tremendously as a result of a higher return rate. That in turn will mean they might be charging high return fees. Once Best Buy is gone for example and if your only choice us online then I see that many online retailers will switch to more stringent return policies. Let’s just say the demise of store retailing will only negatively affect a consumer’s choices.

  • http://mike mike

    It’s about time. I have written to every federal and state official that is in my constituency and this falls on deaf ears. Maybe when the big guns come out we can see some action. Hopefully the tax will be high enough (try 6% split between the 2 states affected) to dissuade some buyers from purchasing on line to save the tax (which is illegal anyway). Now lets get going on reducing the fees imposed on us by accepting credit cards, my #2 expense in running my business. There should be a flat rate per transaction plus a maximum fee per charge, say $30.00. 2% of a $50,000.00 sale really hurts!!

  • http://TheFirstSteve The First Steve

    Referring to (the other) Steve’s comment:

    “Each and every consumer who purchased their electronics on line will one day face their worst fear. They will experience a problem with something they have purchased (say, six months down the road), and they will have to give ‘ol Haji a call. As a custom audio/video integrator, that’s when I laugh the hardest!”

    This is an area where most brick-and-mortar retailers have dropped the ball.

    Most customers buy based on WIIFM – What’s In It For Me. If the product, return/exchange terms and (lack of) service after the sale are the same at both Amazon and a local dealer, there is no tangible benefit for the customer to buy locally from a mom-and-pop store – especially if Amazon’s price is lower.

    I confess I purchased a higher-end DLSR camera from Amazon a few months ago – after the clerk at a local camera store treated me like dirt and was clueless on the operation and features of the model I was looking at. When I sent an e-mail about this to the store’s customer service dept., it took THREE WEEKS to get a half-hearted apology (by then I already had the Amazon order). Wolf Camera handed my business to Amazon on a silver platter.

    In contrast, I buy my lawn and garden power equipment from a local dealer that does in-house service after the sale. If my lawn mower dies, it’s fixed in about three days (not three weeks or longer). This type of value-added service makes the extra $100 or so I spent on the mower a bargain compared to the big-box home improvement stores or warehouse clubs.

    As a retailer, ask yourself: What am I offering (and pitching) to prospective customers to make it worthwhile for them to choose my store over a big-box or Internet purchase? If the answer is “nothing” you’re defenseless against lower prices offered elsewhere.

  • http://J J

    Think back to a time… Say after WWII, all the GI’s coming home from Europe or the Pacific. Major consumer choices were few and far between. Along come the 80’s and a little ‘ol company from Arkansas is expanding rapidly with products that are “MADE IN THE USA” and are VALUE DRIVEN… How long did that last? (Sam Walton rolling in his grave). Now a majority of the stuff they sell is made overseas because of the USA’s need to import vs. exporting.
    The internet is just one more evolution in retail and every single brick and mortar store has to have an online presence or be passed over. Expecting consumers in our fickle society to understand the long and vast nuances of interstate or global commerce is impossible. Taxing online sales is like asking the town drunk to keep an eye on the bar while we run out for a sandwich… the town drunk in this case is most politicians who are “just trying to help their own constituents” with good jobs and bringing revenue back home. Myself having been in retail for the past sixteen years I’ve worked for quite a few of the major players and shrinking margins are getting more and more brutal. LEVEL the playing field for everyone involved! TAX ONLINE SALES. It is the right thing to do, for everyone involved… yes even you sitting in your living room on your laptop, ordering that new electronic device you just went to the local brick and mortar store, chewed the salesman’s ear for about 45 minutes about, only to leave and come home to order, not realizing that person is wondering how they are going to feed their family tonight!