Virtually all of Florida's largest business organizations are lobbying the Florida Legislature this session to make customers of online retailers pay a sales tax, same as Main Street's bricks-and-mortar customers do.
I know I've said it before, but here it is again: This is a spectacularly bad idea.
Main Street keeps talking about "leveling the playing field." But what is there to level?
While e-retailers often have a price advantage, well-run, in-town businesses have competitive advantages all their own:
1. They get great mileage on their ties to community and neighborhood.
2. They offer shoppers the potential for overwhelming warmth and personal service. No website can match that.
3. They attract customers with colorful window displays, then before customers buy, they allow them to see, feel and try on all kinds of items.
4. They don't charge for shipping as most online retailers do.
In the second place, collecting sales tax is not simple and it's particularly not simple for online retailers. Why? Because they have to deal with sales tax laws from such a variety of states.
John Greco, former president and CEO of Direct Marketing Association, said he believes a new and misguided tax will shred online businesses trying hard to survive in these tough economic times. (Editor's note: Lawrence M. Kimmel is the DMA's new chief executive officer.)
Expect cost increases all over the 'net if states continue to force the tax issue. And they would impact in particular the Internet's best customers, middle-class consumers. New regulatory burdens would significantly damage e-commerce and flog the consumers who rely on it.
Third -- and this is one of the biggest problems with an Internet sales tax -- businesses that pay taxes should be getting something from Florida for their money, and e-merchants wouldn't be getting a thing.
As columnist Jeff Jacoby of the Boston Globe observed in an April 17 column, "Taxes paid should bear some relation to services received, and merchants with no 'substantial nexis' to a state receive no services from it."
What he means is, they don't use Florida's firefighters or sewers, don't send their kids to Florida's schools, and don't expect any benefit from Florida's disaster preparedness officials. To force these merchants, nevertheless, to collect and remit this state's -- or any state's -- taxes would be grossly unreasonable.
This is why a tax on Internet sales is indeed a new tax, no matter what the well-financed proponents of this measure tell you. In 1992 the U.S. Supreme Court barred states from collecting sales taxes on businesses that did not have a presence in the state. Florida does not -- repeat, does not -- have a legal nexus to force the online retailer to collect and remit the tax now, for the reasons mentioned above.
The main lobbying group for this tax is called Florida Alliance for Main Street Fairness. But understand, many Alliance members arent exactly mom-and-pop operations. They are the big-box boys such as Wal-Mart, Target, Best Buy, Home Depot and Sears.
They are, in fact, the Florida Retail Federation, the Florida Chamber of Commerce and Associated Industries of Florida. Senate President-elect Don Gaetz, R-Niceville, and Sen. John Thrasher, R-Jacksonville, have both openly endorsed the Alliance agenda.
Expect a costly constitutional challenge if lawmakers adopt the proposed legislation.
What is such a joke to me is that the big-box stores spend a lot of time boo-hooing that they are competitively disadvantaged. But the truth is, they dominate general retail sales on Main Street and at the same time they're highly competitive knock-out artists online. These are the guys who can boast the real win-win.
E-commerce American-style represents the free market in vibrant technicolor with surround sound and a thousand different bells and whistles. All it needs from the Florida Legislature is a good leaving-alone.
Reach Nancy Smith at nsmith@sunshinestatenews.com or at (850) 727-0859.
