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2012-8

Resolution on Tax Parity Between Online and Brick and Mortar Businesses

SENATOR CARMELO RIOS SANTIAGO (PR) INTRODUCED AUG. 2012 MEETING (RATIFIED)

WHEREAS, states are dealing with serious budget gaps, which are often being made up through reductions of services and particularly in cuts to public benefits, school districts, police departments, state colleges, and first responders; and

WHEREAS, states are also stabilizing revenues through increases in various taxes and fees; and

WHEREAS, brick-and-mortar businesses are required to charge customers as much as 9.4% in sales tax while online retailers do not; and

WHEREAS, states are losing from $21.5 billion to $33.7 billion every year in sales tax revenue from online retail sales that go uncollected; and

WHEREAS, the Internet marketplace has evolved considerably since tax collection rules on online sales were established in 1992; and

WHEREAS, some large online retail vendors threaten the ability of conventional brick and mortar businesses and put them at a disadvantage; and

WHEREAS, traditional locally placed businesses improve our communities through tax contributions, employment and overall economic development; and

WHEREAS, as online sales from the largest Internet retailers have grown to the point where we must consider the impact on our local communities; and

WHEREAS, some of the largest Internet retailers have not invested in the communities, and often not even in the states, where they sell their products; and

WHEREAS, doing business at a distance requires the use of public or regulated resources such as roads and utilities, whereas incurring a cost to the taxpayer but not offsetting it with tax payments or local development;

THEREFORE BE IT RESOLVED, that the National Hispanic Caucus of State Legislators (NHCSL) urges policy makers to consider the potential competitive imbalances that result from the competition between the largest online retailers and businesses located in our communities; and

BE IT FURTHER RESOLVED, that NHCSL should evaluate legislative remedies like the Marketplace Equity Act or the Main Street Fairness Act, which seek to address to concerns; and

BE IT FURTHER RESOLVED, that we are cognizant that giving states the power to collect revenue they are already owed at the point of purchase is not a new tax, but a balancing of the tax burden between large online and local businesses; and

BE IT FURTHER RESOLVED, that we believe states ought to pursue compacts that will establish one consistent framework for the treatment of taxes from large online retailers.

BE IT FURTHER RESOLVED, that NHCSL will advance these policy goals and generate support in the few states remaining that have not adopted these views; and

BE IT FINALLY RESOLVED, a copy of this Resolution will be transmitted to leadership of the Committees of jurisdiction in Congress and organizations that advocate similar views.

THIS RESOLUTION WAS ADOPTED ON AUGUST 25, 2012, AT THE NHCSL EXECUTIVE COMMITTEE MEETING HELD IN ATLANTA, GEORGIA AND RATIFIED AT THE NHCSL 2012 ANNUAL MEETING HELD IN ALBUQUERQUE, NEW MEXICO ON NOVEMBER 17, 2012.

Sponsored by: Senator Carmelo Rios Santiago (PR)