RICHMOND — Virginia won’t start this year to collect tax on purchases people make on the Internet, a House of Delegates subcommittee decided Wednesday.
The prospect of losing small local businesses that earn money from their own Web pages, much of it through links to Internet giants like Amazon.com, led the House Finance subcommittee to reject arguments from several traditional retailers, including Danny Givens of Lynchburg.
The bill sponsored by Sen. Emmett Hanger, R-Augusta, SB 660, had as many opponents as it did supporters during an hour-long session in the subcommittee.
The proprietor of Givens Books told the legislators that passing Hanger’s bill would create a “level playing field” for traditional retailers like him.
Del. Chris Peace, R-Mechanicsville, asked Givens, “Can you tell me who is responsible for this unlevel playing field?”
Givens replied that a U.S. Supreme Court decision in 1993 was a key barrier to collecting Internet sales taxes. But many companies, including Amazon, have operations in Virginia that should be subject to the state tax, Givens said.
People often come into Givens Books with their Internet-linked phones, scan his prices, and ask him to sell an item for the same price they found online.
“And they walk out of my store without buying anything,” Givens said.
The committee didn’t appear sympathetic, particularly when Givens referred to “bullies” among the online giants who threaten to withdraw their relationships with smaller affiliates if a sales tax enters into a transaction.
The subcommittee chairman, Del. Tim Hugo, R-Fairfax County, told Givens, “I’m not sure it’s necessary to start calling people bullies and getting personal. It’s unnecessary. I think you might want to handle it more professionally.”
Givens replied, “I’ll try to do that.”
Hanger told the committee that online retailers who don’t collect the sales tax are getting “a 5 percent off-the-top advantage” over traditional retailers “and that’s something we should correct.”
Hanger said he plans to bring back new legislation next year to tackle the problem.
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