“Buy local.” The sentiment is simple, the results meaningful. Buying locally not only keeps our brick and mortar shops open and our village centers thriving, the sales tax collected from local sales funds fire and police departments, public works projects and other critical community services. Proud Vermonters embrace the “Buy Local” movement as loyal patrons of their treasured downtowns.
Yet despite the momentum generated by the “Buy Local” campaign, brick and mortar retailers face a growing, and somewhat unknown, threat: the unfair advantage enjoyed by out-of-state online retailers who are not required to charge sales tax. The result? Local retailers are losing customers critical to their viability, and local communities are losing revenue generated by sales tax needed to fund the community services they depend on. It is time to level the playing field and require online retailers to charge sales tax just as other retailers do.
Burlington Advance Music Center’s partner, Mike Trombley, continuously experiences the negative effects of this unfair playing field: his retail space is a “free showroom” for customers who benefit from his staff’s knowledge, then go home and purchase the product online. In an effort to stay viable, Advance Music aggressively prices their product, but is often further challenged by customers trying to discount an additional 7 percent for sales tax that is not charged by out-of-state online only retailers.
Even worse, large online retailers are realizing, and capitalizing on, their unfair advantage. Recently, Amazon.com declared they would offer up to $5 to customers to walk into a retail store, scan an item, go home, and buy the same item onAmazon.com. Not only does this drive more local sales to Amazon.com, it provides Amazon.com with valuable information about how brick and mortar retailers are pricing their products. It is unfair and, frankly, hits below the belt.
At a time when states are facing budget shortfalls and critical community projects are suffering, it is essential that we support local retail shops and thus, our local communities and our state. A University of Tennessee study released in April 2009 projected that states could lose up to $23 billion from uncollected sales tax in 2013. This huge loss could result in state and local governments raising other taxes and fees to address the deficits. Vermont stands to gain up to $40,000,000 if online sales tax is allowed by congress.
Congress has taken notice and is taking strides to update the tax system to keep up with the rapidly expanding Internet marketplace. Rep. Peter Welch, D-Vt., was one of the first to realize the need of legislation to protect Vermont’s downtowns. Sens. Leahy and Sanders supported a measure that passed 74 to 24 giving huge momentum to help our Vermont retailers get a fair and level playing field. The measures enjoy bipartisan support and are designed simply to give states the right to collect revenue they are already owed and eliminate the unfair competitive advantage threatening the sustainability of our cherished community centers.
Join the growing coalition of Vermont retailers, community groups, historic preservationists and business associations who are all working together in collaboration. Until our local brick and mortar retail shops are allowed to compete on a level playing field with out of state Internet companies, we must both realize and act upon the reality of this unfair threat.
As proud Vermonters, please continue to “buy local” and think twice before you log-on and hit “Purchase.” Our Vermont stores support local charities, employ locally, are engaged in their community and pay sales tax that supports our state.
Ernie Pomerleau is president of Pomerleau Real Estate in Burlington and East Coast government affairs director of ICSC, a 60,000 member developer/retail organization.