Marketplace Equity Act – Should Online Retailers Have to Charge Sales Tax?

There’s a lot of buzz about the Marketplace Equity Act right now (check out the twittersphere #efairness if you don’t believe me). It’s an act that if passed will require merchants who sell goods online to collect sales tax from their customers. Introduced in October of 2011, the Marketplace Equity Act is scheduled to be discussed by Congress next Tuesday (July, 24, 2012).

Ugh, who in their right mind would want more taxes? The movement is actually gaining a lot of support from traditional retail stores that want to level the playing field and, more recently, state governments that are desperate for money. For some time now, large traditional retail chains that rely on in-store purchases for the bulk of their sales have complained that online-only retailers have an unfair advantage. They can undercut prices because they don’t have to keep up the costs of having and maintaining physical, brick-and-mortar stores. They don’t have to employ as many sales people. And they don’t have to charge customers sales tax.

But wait a second — many of the top Internet retailers are also traditional retailers, such as Staples and Wal-Mart, ranked No. 2 and No. 4, respectively, in online sales. If they are suffering from unfair disadvantages, how are they doing so well?

My Opinion

I can see why state governments are calling for online retailers to charge sales tax, especially in this economic climate. I have no problem paying sales tax knowing that it will go to fund schools, road improvements, police officers’ salaries, etc.

But to those traditional retailers crying out “unfair disadvantage!” – I don’t buy that. In this multichannel day, every retailer should be using an online channel to sell their products. Heck, they should have multiple channels – mobile, social, print, etc.  If you’re only going to use one way to reach and sell to your customers, then you’re setting yourself and your company up for failure. There’s no unfair disadvantage. You’re just not being smart.

What is your take on the Marketplace Equity Act? Are you for it or against it? Leave a comment or join our Linkedin Group and start a discussion!

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