Grossman Calls on U.S. Senate Finance Chair to Approve Uniform Online Sales Tax
Cites Main Street Fairness and Need to Protect Local Businesses and Jobs
Treasurer Steven Grossman today issued a letter to U.S. Senator Max Baucus, Chairman of the Senate Committee on Finance, urging him to support legislative efforts to allow states to implement uniform Internet sales tax laws.
“This is fundamentally an issue of Main Street fairness - brick and mortar stores that create and support local jobs should not be at a competitive disadvantage against out-of-state online sales giants,” said Grossman. “It’s time to level the playing field by creating a consistent sales tax policy.”
Online retailers only have to charge a consumer a sales tax if they have a physical presence in that consumer’s state. This provision results in many online purchases not being assessed the Commonwealth’s 6.25 percent sales tax, creating a disincentive for residents to shop at local businesses that support jobs and the Massachusetts economy. Further, large internet sellers that have built and invested in retail stores in Massachusetts, such as Apple and Staples, are required to charge sales tax for online sales, while their competitors with no Massachusetts investment are not. Presently, there are more than 500,000 retail jobs in Massachusetts.
Grossman pointed to bipartisan legislation authored by Senators Mike Enzi and Richard Durbin as an example of a fix at the federal level. While Massachusetts officials have entered into negotiations with Amazon.com to discuss charging an online sales tax, a federal law is generally viewed as the most effective way to compel all online retailers without a physical presence in a state to charge that state’s sales tax.
A recent independent study has concluded that, in addition to creating a level playing field for local businesses, Massachusetts could have collected $387 million in additional sales tax revenue in 2011 if it had the ability to tax Internet and other remote sellers. That amount is expected to more than double to $783 million by 2020.
A copy of the letter to Senator Baucus is attached, along with an op-ed that Treasurer Grossman wrote about the issue earlier this year.