According to an article in the Statesman this week, Gov. Perry is considering legislation that would exempt Amazon and other online retailers from paying sales tax in the state of Texas in exchange for the creation of 5,000 jobs and a promise to invenst $300 million in Texas over the next three years. Comptroller Susan Combs estimates that were Texas to collect due sales tax from Amazon, the online retailer would owe the state $269 million dollars it failed to collect from 2005 to 2009.
BookPeople CEO Steve Bercu has this response:
“As I have testified in both the House and Senate, Texas would be much better served by passing the bill it has in front of it now. If the bill passes, Texas retailers will create at least 10,000 jobs without any extra incentive other than being able to compete fairly. The state does not need to pick favorite retailers and especially not out-of-state ones. Favoring out-of-state retailers over Texas retailers that already collect sales tax, pay property taxes, contribute to their communities, and live in Texas makes absolutely no sense. Talking about imaginary jobs instead of helping existing retailers create them is foolish. We should all be doing everything we can to contact our state representatives and senators and urging them to support SB1 as it is written.”
What do you think? Should online retailers like Amazon be given a pass on sales tax?
BookPeople 
I’d like to know more about the ‘level playing field’ people talk about when discussing Amazon and sales tax. As a consumer, I feel like it’s such a small part of my decision that it’s a non-issue, so maybe I’m missing something bigger. When I buy from Amazon, my considerations are: Do they have it? How soon can I get it? How much is it? Usually in that order. Amazon has more stock and I can usually get what I want quickly and at a great price without leaving the space I’m in when I decide I want whatever it is I’m looking for.
Sales tax doesn’t factor into my decision in terms of purchases at Amazon and only rarely is an issue with other online stores. (Everything else has to be a dead tie, and that’s rare.) I’d like to hear more from the local businesses about how it is an issue in ways I am just not yet aware of and how much of a difference it makes from the business point of view and what impact that has on consumers. Maybe you can help me fill in the missing pieces.
This is from Steve, BookPeople’s CEO:
I can understand your interest in convenience. It certainly has its place. Did you know that you can order any book you might order from aAmazon form a locally owned book store (like BookPeople) and have it shipped to your door in the same amount of time (hint: we get them from the same distributor)?
As a consumer you should be concerned about the health of your local businesses. If they fail you will be left with very few options. The bad news that comes with fewer options is that it soon begins to restrict your choices at earlier points in the process. If there are fewer outlets then the publishers are able to support fewer authors (which means there are not as many books to choose from). You also don’t get to have them visit your town so you can meet them and hear what they have to say.
Of course, online retailers do not participate in the community in any meaningful way (book fairs, donations to hundreds of local groups, literary book camps, story times, book clubs, and more). Also you are actually subsidizing online retailers that do not collect sales tax already since they use state and local services every day without helping to collect the taxes that pay for those services (things like road maintenance, the court system, the mail service, etc). Your rates are higher because the services have to be paid for no matter who helps or doesn’t help.
I hope this is helpful.
At the very least, the Texas government should enforce the Use Tax that is already in place: http://www.window.state.tx.us/taxinfo/sales/faq_use.html.
The state could start by issuing a subpoena to Amazon for a list of all Texas residents who purchased more than $1,000 in goods from them for the past year. Then, the state could verify that the residents paid the taxes. If the state started enforcing the existing law, people may just decide to buy local. Filling out the forms for paying the use tax is much more of a pain than having the retailer collect it for you.
Amiee, the sales tax piece of the ‘level playing field’ falls into your consideration of “How much is it?” when you’re making your buying decision. Since most people don’t pay the use tax even though they’re legally obligated to, the price of a book on Amazon is 8.5% cheaper than a book bought at a local bookstore in Austin. This 8.5% difference in price does not go to the retailer.
In addition, there is a cost of labor and equipment for a local bookstore to track and pay the sales taxes. It’s part of the price of accounting software and the accounting staff, but it definitely takes time to properly track the city, county, and state portions of the sales tax and to properly pay them. If the business gets audited on sales tax, there is even more expense. These are costs that narrow the profit margin of local businesses.
For me, a big issue is the huge loss in revenue for our local governments. Texas has a long history of raising money for local and state governments through sales taxes and does not have an income tax. As online shopping has surged in popularity, the planned sales tax revenue has dropped, which directly translates into cuts in essential government services.
If Amazon and other online retailer do not collect Texas sales tax, the government needs to collect the use tax. However, they don’t have an efficient way to enforce this on smaller purchases that I know of. (They have no problem collecting the use tax on cars when they’re registered for a Texas license plate.)
Back taxes are not going to be collected, but new ones will be starting this summer: http://content.usatoday.com/communities/ondeadline/post/2012/04/amazon-strikes-deal-to-begin-collecting-texas-sales-tax/1