Thursday, May 9, 2013

UPDATE: Senate Approves Online Tax Bill 69 to 27

The US Senate recently approved the Marketplace Fairness Act with a final vote of 69 to 27. If the bill is passed by the House, it would impose a national sales tax on Internet retail transactions. While the proposed bill has received considerable support, its fate is now in the hands of a skeptical House of Representatives.

The main argument that many lawmakers have regarding the Marketplace Fairness Act is that it seems too similar to a tax increase, and "while it attempts to make tax collection simpler, it still has a long way to go," stated Rep. Bob Goodlatte, R-Va (USA Today).

For years, businesses have tried to convince lawmakers to pass similar legislation. Brick and mortar stores are currently at a 5% to 10% price disadvantage by having to charge sales tax (USA Today). Many believe that a bill such as this would level the playing field between brick and mortar businesses and online competitors.

Internet retailers such as eBay and Etsy are fighting back, claiming that certain elements of the bill are unfair. Specifically, many believe that the threshold for triggering the tax is too low (retailers with sales over $1 million annually), treating small and large, multi-billion dollar online retailers exactly the same.

For details about the bill and why eBay and Amazon have opposing views, refer to our previous post, "Marketplace Fairness Act: Two eCommerce Giants with Opposing Views."

by Samantha Warner
Marketing Extraordinaire