The Online Advantage

I wrote yesterday that independent bookstores had suffered a loss of business to online retailers like Amazon. Here in the US, Amazon has an advantage that they do not have back in the UK. A mail order business does not have to charge sales-tax on a sale unless the delivery address is in a state in which the business has a physical location. This means that Amazon only charges sales tax in five states. For California residents this means that the local store has to charge 8-10% more. Customers are supposed to declare all such purchases in their end of year tax declaration to the state. However, this provision is not well observed or enforced. Thus localities lose out twice; from diminished tax revenues and from loss of spending to support local business.

Businesses such as Amazon claim that it would be too complex to calculate and remit the correct, which with each county in each state having its own sales tax rate seems reasonable at first glance. However, Amazon run the online store for Target. Target has a presence in nearly every state in the Union, so Amazon charge and remit sales tax from these purchases. The real reason for opposition to a change in the law is that they wish to retain their unfair advantage over local businesses.

Published in: on 20 October, 2009 at 6:42  Leave a Comment  

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