Supporters of a sales tax on all Internet retailers are hopeful that Congress will consider their bill in the next two weeks. It's estimated that the tax will bring an additional $25 million in revenue to the state of Vermont.
While many online retailers celebrated "Cyber Monday" on Monday to boost their sales, Bear Pond Books in Montpelier decided to promote "Cider Monday" to encourage customers to visit their store. A large bowl of hot cider and donuts were placed on the store's checkout counter.
The second half of the lame duck Congressional session is scheduled to run for the next two weeks and backers of a bill known as "The Main Street Tax Fairness Act" are urging Congress to pass their legislation.
States now are allowed to impose their sales tax on an Internet retailer, like Amazon, only if the business has a "physical presence" in the state such as a distribution center or a retail store.
"It is absolutely an issue of fairness, so we feel that our competitors should play by the same rules." - Bear Pond Books co-owner Claire Benedict on the need to impose the sales tax on Internet purchases
Claire Benedict is the co-owner of Bear Pond Books. She thinks it's unfair to give most online businesses the advantage of not having to impose a state sales tax.
"It is absolutely an issue of fairness,” said Benedict. “We have to pay them we don't get to opt out because we don't want to - these small businesses in downtown - so we feel that our competitors should play by the same rules."
Benedict says it's common for customers to come into her store, examine some books, and then go home to order the books from an online business.
"It happens everywhere; they use us as a showroom to go in, then buy things online,” said Benedict. “I think it happens with all businesses these days."
Internet businesses were originally exempted from a state sales tax to help this new industry get off the ground. Benedict says there's no reason to keep that exemption in place in 2014. "That idea that we have to protect these fledging new businesses is out of the window," said Benedict.
Congressman Peter Welch, who is a co-sponsor of the Main Street Tax Fairness Act, says this is a perfect time to address this issue in Congress. The Senate has approved the bill but it's stalled in the House.
"We've got these down towns, those merchants are really important in our communities,” said Welch. “They are willing to compete on price but if they have to collect a six percent sales tax but their online competitor doesn't obviously that's a wicked disadvantage for them."
Jim Harrison, the executive director the Vermont Retail and Grocers Association, says his organization strongly supports the Internet sales tax plan. Harrison notes that Vermont law already requires all consumers to pay the sales tax on out of state purchases when they file their income tax returns. The problem is that most people don't do it.
"It's definitely not a new tax,” said Harrison. “If we go over to New Hampshire and shop for example we're supposed to declare those purchases and pay a use tax on those. If we purchase from Amazon we're supposed to pay a use tax for them."
Not all Vermont businesses support this legislation. Some that conduct a large amount of out of state online sales feel it will make their products less competitive and they don't want Congress to act on this bill.
