A Tax That's Fair to All Businesses

Back in the mid-1990s, when the Internet was in its infancy, the position of political leaders across the country was to maintain a hands-off policy toward the emerging information superhighway.

That included Internet commerce, and former Gov. Jim Gilmore was at the forefront of national efforts to develop this new business arena. The former Virginia governor was a key figure in making the argument that sales entered into over the Internet should be free of any local and state taxes.

Back then, it was a good idea. Companies such as Amazon and other e-tailers were just getting started, and whether they — and the Internet along with them — could be viable over the longterm was very in question.

Today, Amazon is a world-class cyber-retailer, but it still is treated under tax laws as though it were a struggling startup company.

It’s time to change.

State Sen. Emmett W. Hanger, R-Augusta County, is shepherding through the General Assembly SB660, legislation that would subject Internet sales by a company with any sort of physical presence in the commonwealth to Virginia’s sales tax.

The legislation passed the State Senate, 28-12, and is now in the Finance Committee of the House of Delegates.

Sen. Steve Newman, R-Lynchburg, wisely voted for this legislation. Dels. Kathy Byron, R-Campbell County, and Ben Cline, R-Amherst County, should heed their colleague’s wisdom and, as members of Finance, send this bill to the full House.

The bottom line is that it is a simple matter of fairness to local, bricks-and-mortar retailers in our own backyards.

Imagine you’re in the market for a new, high-end digital camera. You know that one of the oldest, family-owned businesses in Lynchburg carries the model you’ve been thinking about, so you go downtown, pick the expert salesman’s brain and walk out, saying “I’ll think about it and get back to you.”

That night, you go online, find it on Amazon for essentially the same price, minus Virginia’s 5 percent sales tax and with free shipping. You click the “Buy It Now” button with nary a second thought about that local, downtown business.

Is that fair to the local businessman who hires local folks at his shop, pays local taxes and supports other local businesses and local events, groups and nonprofits?

Absolutely not.

Yet that’s just the advantage Internet etailers have over retailers in the commonwealth.

As Sen. Hanger put it to his colleagues, by exempting online retailers from collecting Virginia’s sales tax, the state is cutting support to local law enforcement agencies, local public schools and local social programs ... hurting millions of Virginians.

He is exactly right, especially at a time when the commonwealth is strapped for cash. Just yesterday, for example, Gov. Bob McDonnell announced an additional $2.1 billion in budget cuts to the commonwealth’s spending plan, including $731 million cut from public schools.

The Virginia Retail Federation is fighting hard for passage of the bill, as they should. Local businesses — businesses that are invested in their hometowns — know they can compete with anyone for the customer’s dollar. It’s just that the competition should be fair.

And currently, in Virginia, it’s not, and local businesses are paying a very steep price as a result.