It’s time to end online retailers’ government-sanctioned price advantage
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This weekend thousands of teenagers across America will have their first date at a movie theater.   Families will head out to buy groceries for Sunday dinner and young children will pull at the shirt tails of their fathers and the purses of their mothers asking to go to the toy store.  

Local businesses play a role in communities that is often overlooked. They make up the shopping centers that generate $145 billion annually in sales tax revenue and account for one out of every 11 U.S. jobs. These businesses are central to the social, civic and economic vibrancy of small towns and cities across the country.   

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Unfortunately, our nation’s sales tax system has not evolved to keep pace with today’s retail environment. Online only retailers are not required to collect sales taxes that are legally due, which gives them a price advantage – potentially more than 10 percent – over local businesses.

The total estimated uncollected U.S. sales and use tax from all remote sales in 2015 was $26 billion annually. This is up from an estimated $23 billion in 2012. Given those numbers, it’s no coincidence that 25 states face revenue shortfalls. According to the National Association of State Budget Officers, more states expect mid-year revenue shortfalls in 2017 than in any year since 2010.

Efforts to level the playing field between online and local businesses have broad bipartisan support from Chambers of Commerce, community organizations, and the American public. However, there have been too many false starts over the years as lawmakers have struggled to make significant progress toward a solution.  

Congress recently renewed its efforts to enact tax parity with the reintroduction of the Remote Transactions Parity Act (RTPA) and the Marketplace Fairness Act (MFA). RTPA and MFA take important steps to treat all transactions the same whether they take place online or in the store. While these bills have been debated before, America’s local businesses want—and deserve—a vote on the legislation to take place in the House and Senate.

Simply put, the legislation would make clear that a sale is a sale no matter where it takes place. Too many stores have closed on Main Streets and town centers across the country because lawmakers in Washington have refused to do their job for the past 25 years. It’s time for this inequity to end. More importantly, fixing this loophole would restore free market principles that are central to America’s economic system.

A successful effort to treat all sales transactions the same—by passing MFA and RTPA—is an investment in the long-term growth of the small businesses that are so crucial to communities. These businesses and retailers are the cornerstones of local economies. They create thousands of jobs, pay the taxes that fund first responders, build schools and make life in our communities better. We all have an interest in making sure businesses with roots in our communities get a fair shake when it comes to competition. 

Tom McGee is the President and CEO of ICSC. ICSC serves the global retail real estate industry by providing its 70,000+ member network in over 100 countries with resources, connections and industry insights, while actively working together to shape public policy. McGee served as Vice Chairman of Deloitte, LLP, one of the largest professional services firms in the United States.


The views expressed by this author are their own and are not the views of The Hill.