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VIEWPOINT: All retailers must play on level sales tax field

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By Lisa McGill Sweatman
South Carolina Retail Association
Published Feb. 11, 2016

(From Feb. 1 issue of Columbia Regional Business Report)

A sale is a sale, no matter where it takes place. Whether at a brick-and-mortar store or from an online retailer, any sale should be subject to the same rules. Ever since Amazon.com opened its Lexington County distribution center and negotiated a sales tax exemption in 2011, the online retail giant has had a government-sanctioned advantage over South Carolina’s brick-and-mortar retailers. This four-year advantage expired on Dec. 31 and the South Carolina Retail Association and its member companies celebrate a level playing field.

Over the past four years, all online retailers’ sales tax exemptions have put brick-and-mortar retailers at an automatic 6% disadvantage that’s almost impossible for a retailer to overcome. This would be like one team starting out a college football game six points behind its opponent because the NCAA deemed that the opponent should get an advantage.

Lisa McGill page 23
Sweatman
While the Dec. 31 expiration of Amazon’s South Carolina tax exemption is a positive step in the right direction, changes still need to take place at the Statehouse and in Congress to level the playing field between brick-and-mortar retailers and ALL online-only retailers. Conservative economist Art Laffer predicts that if Congress acts to require online-only retailers to collect sales taxes, it would create 19,757 South Carolina jobs and an additional $5.4 billion in GDP.

To be clear, THIS IS NOT A NEW TAX: federal reform would simply require online-only retailers to collect and remit the same sales taxes that brick-and-mortar stores are required to collect and remit every day. In fact, with the addition of South Carolina, Amazon now collects sales tax in 26 states.

Until Congress acts, the South Carolina Retail Association supports a bill filed in the state Senate last year, S. 170, which would require online-only retailers to collect sales tax from so-called “affiliates” within the state. This bill passed the state Senate last session and resides in the House Ways and Means committee.

By allowing online-only businesses to avoid collecting sales taxes, the government is effectively picking winners and losers. The result is a significant imbalance in the marketplace that encourages consumers to shop online rather than in local stores. Local stores are extremely important to South Carolina’s economy. In fact, South Carolina’s retail industry:

• Employs one in four South Carolina workers (approximately 449,000 people);

• Collects and remits $2.7 billion in sales tax annually;

• Pays property taxes, payroll taxes, and corporate income taxes;

• Supports community organizations, schools, and programs like the Little League and Boys and Girls Club; and

• Steps up to the plate in times of disaster.

For example, following the October flooding event associated with Hurricane Joaquin, the South Carolina Retail Association’s retail members contributed over $1.4 million in cash to relief organizations, over 1.5 million bottles of water, and countless other supplies during that month alone.

The retail industry is fiercely competitive. Nobody likes paying or collecting sales taxes, but all retailers should play by the same rules and compete within those same rules. The South Carolina Retail Association welcomes Amazon.com to the playing field where retail sales will begin with a fair and equitable start.

Lisa McGill Sweatman is director of government relations of the South Carolina Retail Association.

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