The downside of the ‘Amazon tax’
The News & Advance’s Feb. 19 editorial, “A tax that’s fair to all businesses,” misstates the purpose and fails to consider how Senate Bill 660, commonly known as the “Amazon tax bill,” would hurt Virginia’s economy.
Virginia does not “exempt” out-of-state online or catalogue retailers from collecting sales taxes. Any seller who has a physical presence in Virginia is already obliged to comply with our sales tax law. Sellers who don’t have a physical presence are not required to collect, because the U.S. Supreme Court has held that thousands of tax jurisdictions with differing rates and rules are an unconstitutional burden on interstate commerce. With the U.S. Supreme Court already taking this position then Virginia gains nothing by asking our state legislators to get involved with this issue.
This new legislation declares that out-of-state retailers who pay Virginia Web sites to host advertising are akin to having an on-the-ground sales force in Virginia. This would not, as your editorial asserts, force cyber-retailers to begin collecting sales tax here. If the bill passes, out-of-state retailers will just stop paying Virginians for advertising referrals, as they did in North Carolina and Rhode Island when those states passed similar legislation.
While this law would have little impact on out-of-state retailers, it would harm everyone in the commonwealth who relies on those advertising dollars including nonprofit organizations and even public school PTA’s who use Internet advertising for revenue and fundraising efforts. There are more than 5,000 Virginia businesses who rely on this advertising revenue to support their businesses and hire employees. Businesses have already received notice from Amazon that major advertising relationships will be severed if this bill becomes law.
That’s why the net effect of this legislation is all pain and no gain. As indicated in the bill’s own fiscal impact statement as submitted by the Virginia Department of Taxation, there is no actual expectation of new sales tax revenue.
Last year, North Carolina passed a similar law but reports no new revenue, and an online marketer in Greensboro announced plans to leave the state, taking 500 jobs with them.
Virginia is now ranked as America’s top state for business. If SB660 becomes law it will be bad for businesses that rely on advertising revenue, costing the Commonwealth both income and much needed jobs.
JONATHAN WHITT
Executive director
Region 2000 Technology Council
Reliable carrier
I would like to express my appreciation to Steve Schweikart, my News & Advance carrier, who delivered my newspaper on time every morning throughout this horrific winter weather. I think he only missed Dec. 19, and I probably couldn’t have make it to the paper box anyway.
Thank you, Steve!
BILL PUCKETT
Amherst
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