Leveling the Virtual Playing Field

April 29, 2014

As a former small business owner, I admit to a fondness for the business owners on the Main Streets of America – employing workers, paying taxes and providing culture and commerce for our communities.  Perhaps that is why it really got my attention when I learned that Lakeside Camera, a great shop in Metairie, lost fully a third of its equipment sales last year to the internet:  it seems that shoppers have learned to browse in the store, but then buy online – where they can avoid paying sales tax, for a hefty 9% discount.

The result is that local stores like Lakeside Camera are having problems.  Moreover, local governments are being cheated of desperately needed revenues – to the tune of an astounding $800M last year in Louisiana.  As we argue and fret in the Legislature about looming cuts to healthcare, higher education and human services, we could sure use that funding.

Now make no mistake – this is not an issue of competition.  The internet is a disruptive but very positive force in commerce.  Internet retailers don’t have the “brick-and-mortar” costs of traditional sellers, and that is an important and legitimate advantage.  But not charging the same tax for the exact same item?  That is not fair – that is not a level playing field.

And further, this is not about taxes – it is about tax collection.  The sales tax already exists, and online retailers are simply exploiting an outdated and increasingly large loophole by not collecting it.

Finally, this problem will not go away, as internet sales are expected to increase nearly 15% annually.  The result will be more lost local jobs, more lost local revenue, and more lost services.

So in order to level this virtual playing field, GNO, Inc. will be forming a coalition to educate citizens and lawmakers about the economic effects of inaction, and to advocate that Congress act on the Marketplace Fairness Act, which will close this loophole.  If you are interested in getting involved in our efforts on this issue, please contact Caitlin Berni, GNO, Inc.’s Director of External Affairs, at cberni@gnoinc.org.

It is time to level the virtual playing field.