From Roanoke.com:
When Virginians make purchases from Amazon.com they are not paying sales tax on that item (unless the consumer reports it on their taxes).
The Virginia General Assembly is considering a bill to change that.
The bill clarifies the current law, which says that any retailer with a physical presence in Virginia must collect and remit the 5 percent sales tax. Amazon, which has two facilities in Virginia, hasn’t done that.
Apparently a 2007 ruling from the state tax department said that Amazon isn’t required to collect and remit sales tax because its facilities in Virginia don’t handle sales.
To add to the story, it was announced last month that Amazon would receive more than $4.3 million in financial aid and other incentives from the state to build two fulfillment centers outside of Richmond. Those centers would bring 1,350 jobs to the area. Amazon is investing $135 million in the buildings.
The retail community has voiced its displeasure with the loophole.
A statement from the Virginia Retail Merchants Association said that it is unfair for Amazon to receive tax dollars as incentives unless the company agrees to collect sales tax.
“Every retailer should be playing by the same set of rules and let fair.
Ouch! A bill making Amazon collect sales tax might very well alter many people’s spending habits. How many people shop for no taxes and no shipping? I certainly do. If you buy Amazon Prime, you can get most things without paying for shipping which makes purchases pretty much “what you see is what you get” when you first look at the item. Many online stores charge tax and and shipping and handling. Often these charges can really up the bill on high ticket items.
I don’t have much sympathy for the retail community. They are trying to dodge the bullet any way they can also. Amazon was told they weren’t required to collect and remit sales tax and that should be the end of it. Apparently someone in the legislature is in the pocket of the retail merchants and is beating the drum on their behalf.
How many people consider shipping and taxing when deciding on a purchase? Should Amazon be allowed to continue or should legislators cave in to the Virginia Retail Merchant Association?
So Virginia will be subsidizing Amazon to attract their business? Interesting, when Obama bails out auto companies, that’s bad cuz it interferes with the free market. But when VA repugs vote to subsidize businesses in VA, that’s okay?
@Starry, is there a side to this? I didn’t read if Dems or Repubs are trying to get sales tax out of Amazon. I would imagine that since the dems held the GA in 2007 (I think) and they told Amazon they were exempt, it was the democrats attracting business. The governor was also a Democrat.
Regardless, I want things to stay as they are for very selfish reasons. I will see any change as a tax increase since I shop a lot on Amazon, They have lots of free movie services, free shipping and no sales tax. Life is good.
Deals are cut all the time to bring in jobs. It sounds like our state is reneging on a promise.
I am sure that Amazon will be perfectly willing to move to states that will not require them to collect sales taxes. With its high unemployment rate, I bet South Carolina would be willing to forego sales tax in order to attract those fulfillment centers.
Excellent point Kelly. I agree.
(should I worry that you and I are agreeing?)
Starry, not totally discounting your point but there is a difference between 4.3 million at the state level and GM with over 50 BILLION at the federale level.
I have sympathy here for taxpayers. This rate should be lower and we should all work towards that goal.
@Moon-howler
I think we agree far more than you realize, although I tend not to post all that often when we do agree.
@Kelly, you should let me see that side of you…..please?
“How many people consider shipping and taxing when deciding on a purchase?”
Depends upon the product I suppose. For example, Lego runs both stores and their online site for purchases. Lego even lists in their catalog (print & online) which States they collect taxes from. They do not have a distribution center in VA, but do have brick & mortar stores and collect VA taxes both in stores and online. Sure does not slow down folks purchasing those building sets!
@Moon-howler
I will see what I can do. In the meantime, if you have time, please consider reading the essay below and telling me what you think about it. Completely non-partisan, it provides a very interesting analysis of the shifting definitions of liberalism and the failure of the current liberal and conservative prescriptions for success.
http://www.the-american-interest.com/article.cfm?piece=1183
Still reading, Kelly. I don’t agree with you that it is non partisan though…perhaps I will change my mind at the end.
Amazon does compete with bricks and mortar stores. I buy nearly all of my clothes online and would do so even if I paid state taxes. I am selective about shipping costs.
I don’t like clothes shopping and because I’m petite, my selection in stores is limited. When I buy online, I can get what I want in my size. The internet just offers more variety.
I do, however, have sympathy for the traditional retailers — they definately are at a competitive disadvantage with internet retailers because of the sales tax.
Many retailers didn’t change with the times also. Many internet vendors do charge sales tax also. Best buy does as do the shopping channels, just to name a few of the big boys on the block.
Um, you can’t get lower than zero.
Actually you can (-1 for example) but I’m not talking about Amazons rate. I was talking about consumers.
@Moon-howler
It is interesting that you should find the article to be partisan as it was written by Walter Russell Mead who is a Democrat and claims to have voted for Obama. Anyway, I found his thesis to be interesting and well supported by the evolving history of liberalism.
Kelly, I had not finished the article and yes I do find it partisan. I still haven’t finished it because I have had a million interruptions today.