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WWL>Topics>>5-2-14 1:10pm Angela: on tax-free internet shopping

5-2-14 1:10pm Angela: on tax-free internet shopping

May 2, 2014|

Angela talks about whether internet purchases should remain sales tax-free with Caitlin Berni of GNO Inc., Mark Strella of Stay Local, and Stirling Properties president Marty Mayer.

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Automatically Generated Transcript (may not be 100% accurate)

Well welcome to Friday and it is always -- happy Friday were doing something a little different instead of our open Mike with. Where we meet three new friends were gonna be talking to foreign inference about a topic very near and dear to them and I think too many of us in this community. If you own or operate a small business in Louisiana are tax free Internet sales hurting it. Some business leaders say Internet sales are putting local retailers out of business. And that's why they're backing the marketplace fairness act. They say online and catalog retailers no matter where they're located should be required to collect sales taxes at the time of the transaction. Exactly like local retailers. Do you agree or disagree. Let us know give us a call at 260187260187. Here to talk about the issue is Caitlin -- director of external affairs for -- wink. Markets drill project coordinator for state local. Marty mayor president at sterling properties. And Tom low number who owner of Octavia books and I appreciate. Very much all of you being on a busy Friday with busy lives but I can certainly sense that this is. This is very important to all of you and now we're hearing about the impact. Of Internet sales and there are the benefit of not having to pay taxes. Affecting local businesses would any of you have any specific information on if you have a whole list of supporters. On specific stories you have heard about are they our sales down 10% 20% 30%. Well. This is Tom and Octavia books and it's we've been in business for fifteen years are we mean our sales. Are keeping this going by where you know clearly we know that we. Are working at a at an unfair. Disadvantage. -- Our online competitors automatically having an effect Erica. 9% subsidy from. The state -- Louisiana. Because. They're not charging sales tax we do we we provide. Just a fabulous shopping environment for books. By. We were working at a disadvantage fortunately we have a lot of loyal customers by. But not everybody does yeah and then people may be loyal 90% of the time but. There's there's always the temptation to. Try to save a few bucks and and that it's it's kind of a false economy because it's yeah it's it's happening at the expense of of our state. Angela this is Marty with sterling properties. You know I think it's really important that everybody understands. Kind of where this with a history of this thing isn't it -- in context because I think when you. When you really explain it to people it becomes a common sense issue that really have to be addressed. That the history of this really was was based on. A Supreme Court law that was passed in 1992 or twenty years ago which relate to primarily and catalog sales and if if a merchant did not have a nexus which is today. Place a physical plays that location. Within -- state. Then they were not they were not required to collect the taxes. And you know consequently. Though even though 46 states have sales tax. That's the the burden of paying the tax is on the user in those cases the buyer. Now and that's another thing those taxes even at a merchant doesn't collect them or do it's not they're in their tax Fareed it's just so it's taxes they really. And the and the fact that the matter is nobody pace in 98% of the people don't self report their taxes. That's part of their state taxes even though legally required so this is the tax collection problem is -- a new new problem. And it it it doesn't take any you know at that scientists understand that since 1992. To 2004 team. This is not catalog sales issue at this is what has happened. With the with the rise of sales over the Internet has been. -- is estimated that 23 billion dollars of sales lost across the nation and that. It is estimated that as much a hundred million. Ins in Louisiana. Its sales taxes lost that's that's why -- the state level informant at the city level. And we're and we were growing. With the budget problems is worsening hole because the demographics sites that. You know when -- -- three -- programs and by the Internet that gap is gonna get worse so -- the fiscal problem as well there problem. So you know it to me it's an issue that needs to be addressed it's gonna get worse and it's based on the laws that you know is is over twenty years old it could've easily been written in the civil war does that apply to the -- society. And it's staggering is that is the number is. On the loss of sales tax collection that we have in the state that the real losses come it's a huge economic loss because we're basically. Creating. A payment are a subsidy for people to take their money outside of the state to businesses that don't contribute anything to the economy. Mean nothing really. Of that money goes on a one way. -- to nowhere. And and that's and that's really hurts. Our economy you know for those who and -- -- -- a bargain shoppers alike say go to the box but I also recognize that. I want stores in this town. And if I'm gonna go running and -- didn't think I'm saving 9%. Ultimately I'm contributing to a loss of distortion town that I wanna go to. In the stores in town are are are ready for providing a bargain by providing that service right there where. Goods are available. There but the more that. There is say an unfair kind of bargain on the other side that takes away the ability for local stores to offer you -- that they're bargain that they want it -- you every day in in the fact that I'm. The fact of the matter is that when it went Louisiana is a third of the revenues are based upon sales tax. So you know we we are dealing with a a a taxing issues in in if we don't get it through sales tax were either going to -- a deepening crisis and the state. Budget or we're going to. Get tax and another way. Well 400 million dollars this sickness. Really really significant mark talked to me about. By local. -- -- so you know we're sitting here with an owner of a local bookstore to news. You know funding city services responding please education because he's required by law Q. Collect that cells that at the point of sale. On and says this is -- here consumer and you're shopping on mine. Year -- you're looking to make especially inexpensive purchased -- 9% adds up so it's almost you know. It's hard to expect people to not want to do that now and so this is this is. It's up to the policy makers right now to comment and address this to take care of now the little guys and just to essentially ensure the integrity. Aaron free enterprise in this country okay. I think we've laid the ground work for this I hope that if you're listening if you had any comment you won't hesitate to call us again that numbers 260187. Day. We're gonna take a quick break we're gonna come back and we're gonna talk about this act that's being proposed before congress stay with us I'm Angela on WW well. Well the few shop from catalogs are on the Internet. You know that you don't pay sales tax and what we're talking about today is the the movement. By small business really to say -- huge disadvantage because of that because we in fact by law must pay the sales taxes. It's on. It's a very very important because if you believe in small business and certainly if you want to keep the stores in your community going which we all do. That we need to look at this and it's in the sense of fairness which is that the most important word. We have some callers are really appreciate match you call. Yeah. Hello. -- -- -- And are back into it. -- -- -- -- -- -- -- -- Local stores are you know I'm -- good order this structure. That they are supporting. But it's it's no different there -- drive. This should be and -- and I. Well wouldn't you be paying the taxes in Mississippi. Right so -- we do would be paying tax this -- I know what you're talking about the no tax on clothes and that's the same case in Massachusetts. Mad fact one of my questions to our group is going to be. Let's say I know this address in a store in Boston. And they send me that dress they don't have sales tax. So they wouldn't. Why -- day to charge me 9%. And might have I got that confused. While there too isn't doing this okay and if you were cute you know and -- Require an online retailers to herself sex these cells has to be charged based on the consumers. Holmes beat so you know -- Louisiana resident would pay Louisiana tax matter where their purchasing for him or you can do it based on the view though he. The location of the actual online retailer. So if the online retailers located in Boston. I think it's New Hampshire that doesn't have a substance. Then they wouldn't have to collected but if you know if you are an online retailer on your base in Louisiana no matter who's buying your products you're just collecting Louisiana's sales tax. On an act that's one of the issues that congress is currently debating where Q. You know where's the origin of this network is the -- take. Please. And that's a very important thing it is New Hampshire who may not have the sales tax but in Massachusetts. Clothing is exempt. I think just what he was saying about New Jersey so that not only bringing them up because it's tricky. And it and it and you're saying that and according to the fairness act. They would have to simplify. And make even for all fifty states for this to fly. Right exactly on the United States can agree on whether to. A marshmallow is a candy or. Food so and so one of the things that the marketplace fairness act is does you know. Apply. Blanket kind of classifications for okay. In the the other thing is is is the example that the caller used is not. Is not analogous really because. You know he certainly you can dropped to a state that doesn't have sales tax and and then you'd you'd you'd not. Legally obligated to pay it. That the problem here is this taxes do. It's not it's not the taxes and do that taxes collected because there isn't a good mechanism to collect the taxes. So you know really what this is doing besides the fairness is is making. Cleaning up a problem with a tax collection problem or tax invasion. OK I think I think the caller is also. On the right track in that. You know why should why should you -- be treating. Physical. Sale different then an online sale that we might my independent bookstore Octavia books we sell on the Internet. We you know we and we ship often to people in the state and so word. And you -- a look at what we're charging -- -- if you send a book to Omaha. You charge the -- no not in Omaha. Right now but you know we wouldn't mind active commitment. That's that's not I mean we are certainly required to do it with their own state right now by. -- You can by the same book. On line from I'm not encouraging -- if you can go you can go to oh. The number of companies -- in the book OK you know you go to Amazon and by the book in there and I. Collecting that sales -- that refusing to even though Amazon by the way has I think they have nexus in the in Louisiana they have. They pay a commission to thousands of people who are. Now there has affiliates of their company. That the state of Louisiana is not. It's not requiring them to. And in what this legislation does is it clarifies the ability of this state to do that to be able to do that so okay it doesn't imposed by the way on the state that they must. Charge sales tax that allows each state to make its own decision. On how they're going to do that okay. Let me in -- district up Matt you're still on. And you're also commenting on that that the shipping price if you do something on -- from a catalog our Internet. Negates the sales tax bargain. And did you all dressed up. It every every different kind of business has its own associated costs and so if you choose to go into online selling part of -- cost is paying for shipping. And that shouldn't that should be separate from tax issues. I would agree with that I think this is not necessarily an issue of competition in the Internet has been a great. I am very disruptive force but very positive force for commerce. But not charging the same taxed the same top. Item is just simply not players on a level playing field for these business as. And so what you're saying perhaps or what you're saying markets that they -- thing is the cost of these outside retailers just like that that cost of gas for your car to get them or electricity if you have a brick and mortar in the -- right exactly. -- you know obviously. Being involved in in the I CSC which -- national council of shopping centers the organization that represents. Retailers and and reach people in the retail business all over the world what some -- on the board of you know this this is that this is a big issue but shipping he'd really obviously depends upon. What type of goodness and you know you can see there's a huge differentiate between. That level of the percentage of Internet sales of things like. Obviously books or electronics is high. And even as we get things like now where where where. Baby diapers you know I don't that's getting day which by -- ball. But thought I mean her all the big dog food its owners thought -- -- So that's a big issue and chip because of their their percent of Internet sales as much lower in pet food than it is -- And baby diapers. Brought about by the way we have we ship books into our store all the time I mean every day we we get deliveries from. From our of boxes of books so we're we're paying those shipping cost about -- but you know we've we've sort of created. You know when you talk about like -- people buying groceries online now there's it's not necessary that does it doesn't necessarily make enough a lot of economic sense on it -- on its own. But because there's this. Nonsensical. Situation where. It doesn't you don't collect sales tax on that -- it gives that kind of an unfair. Economy to two to that 22 shopping that way but it it's not necessarily a more efficient way to shop. In all case -- I can't tell you how much I appreciate all of our callers we're gonna have to break for. Not news but Joseph when Nancy Raman Matthew -- stay with -- -- promise we'll get you right after the news. Will we are talking about John. Internet sales catalog sales that are not taxed right now and what effect that has. On local small businesses and and a movement really to change that in its idea it's a fairness -- it is called the marketplace fairness act. It is has passed the senate is in the house and and we're learning all about it and of the quickly go to these calls I can't thank you -- we're gonna start with Matthew Matthew. Yes thank -- few precursor to this call with. I've chosen a name pen name here Matthew because he was -- collector. I happen to be a local. If you got you know questions or achievements and Erica just came in on the conversation -- car. I'm happy to be without. I have been intimately involved in in the collection you know local taxes. And cow. Sales and leave our area. You know adversely affect local business as well as obviously bill that revenues that would be collected locally. It isn't a struggle to collect the taxes. You know as time has -- by hand you know the mighty power electronic age. And the Internet. And the ability to -- -- What I would say -- difficulties in our state regarding. Various tax rates. It has gotten easier because there's been a little bit more emphasis put on. Making system that will work to my knowledge. In people like Amazon and Wal-Mart. Perhaps systems that are just about race so. Would being able collect local tax. I don't know who you have on your panel I apologize so that the again McCain can mentally and conversations. But you know that might be confirmed what some folks there -- that it not heard this. Directly from some speakers think that the candidates so vehicles are just about in place. The reason why these big guys wanna do it. Is of course they have. Manpower to be able setup something like that and then make -- all -- -- to businesses who don't have the manpower. To utilize their sites. Two to meet any tax collection burden that is put on them. So that the electorate that -- that excite just because you're helping us to get there. But from a you know -- -- standpoint from the folks here either local or else. As time goes by it's gotten harder because I think Internet sales levels certainly -- garage and not all. Did you wanna comment on that that's right Internet sales are expected to increase about 15% annually says this is an issue that's only gonna grow. And on this gap is only gonna grow wider -- It's gonna continue to impact our local businesses even more and local governments as well and state governments you know we are always. You know this is struggling for money at the legislature and there's often budget shortfalls and to be leaving 800 million dollars a year. On the table seems to be a quick way without raising taxes to. Collects in -- revenues for the state in a way that makes cents per room and and it and as has been said it's not a new -- exactly just taxes it's is sales tax collection the sales tax exists it's just a matter whether or not it's collected. And and it. These online retailers are sort of exploiting a loophole that I -- in only growing so it's definitely something we need to close here and. And -- then their fueling their growth based on on you know at the expense of taxpayers in our state. -- Yet -- any doubt that. -- -- something has always been there on the state personal income tax return. Pitney thing you know that's almost an honesty policy to allow the line to purchase is subject to -- tax or to -- Well based not based on that than 98% of the people are not honest because -- -- because of the that that's the national average and I'm sure it's not any different here in Louisiana. That that 98 point 6% of the people do not self report there. There there are there taxes as required by there of their individual states. Did you know anything about of course of course are used to -- as someone in the war. I can't grow by about one. It on actually asked by my CPA every year that very thing did you buy anything online. In terms of their they're making it producing 90% of people are saying now. That that's the survey please don't ask me online OK. Okay is it. Matthew I really appreciate your comments are you calling in thank you very very much. Let this go to Joseph in Slidell. I was page -- Howard your -- our mobile owner. And that opened ripple of work that -- you're gonna light sweet situation. Item. Under sixty top ala. -- -- -- -- -- -- -- -- -- But I. -- law. That's a great example precisely and this happens every game across the country and and let me tell you another EE you know as opposed to books a lot of businesses that become such programs you know furniture businesses. Interior design businesses. You know where people go win. They look at something they get model numbers they get that they get -- that the service people the employees to help them. Pick out things and then they go home and bottom line tonight so not only here. People were losing the sales units also costing those. Those those small businesses. The time in the money -- to help these people and that opens. Lakeside -- is another great example of a store that that happens to pretty often. On day begin jury their owner told me that he estimates they lost about a third. Of their equipment sales last year due to online sales tax and he says that they often. We'll show you know a 2000 dollar camera which is about a mid range professional camera. Showed out to the customer and then those folks walk and go home and I don't mind save you know 200 dollars pitches. Pretty hefty discount when you're talking in that kind of money so it's definitely something that's happening in our local source detail and -- Give you an idea of what a law could how it can actually change in this on a study came out last week Amazon collect sales taxes in 21 states. Because largely because they have -- warehouses you know throughout the country so therefore they're required to some states require as well and and some more states are additionally. New rules. And so this report came out last week showed that in the states where sales tax. Was collected by Amazon their sales are down nine point 5%. So the you know there's no doubt some of those sales the other side evidence that is that is that in state sales. Have gone up as well brick and mortar sales have gone up and also also. Online in the state. Sales and rentals and sales -- -- -- out there going guys is that people are people are you know they're probably. Without that. Subsidy which is there at that people are are. Making more rational marketplace decisions that are also helping the local economies. I appreciate that very much Joseph ever gonna go to -- Raymond in Metairie. Thank you. So comment. The first -- have to deal with the issue these statistics here. You know statistic statistic I can be. They can be changing it can be viewed picking -- can use whatever purpose you want. The second point is back on the conversation at all -- -- Spilt milk beat. If -- compensation fifty years ago concerning small bit. Competing which where ignorance. -- Comment there where -- went to take away business. You know market changes well. Different point is that. What -- shot. Quite frankly you have a lot more opportunity. I bought most -- -- because you. Can't get that specific example. Not sure. Quite. What the hours. -- -- -- I'm trying to find -- -- -- couldn't find. So. The problem -- you got up we all so. You have to be able to deal with the pattern. Are the marketplace but I think the debate and your continued market share. -- -- -- -- -- Let me just I don't I don't know kind of business you're in but you know I'm I'm all for -- I'm not a small business I'm a real estate developer and but you know represent a lot of retailers around the you I'm all for evolving in fact this is what this is about it's evolving to have laws. That conform to evolving technology in in the way things RT that's the whole point. This law was based upon something that was twenty years ago more than twenty years in a 22 years ago it was a lot it was past 22 years ago. For specific purpose and I think what's happened is that has had unintended consequences. It isn't it bill that taxes are due that's the whole point this is just about. Cleaning up a law that doesn't apply today's world. Thank you so much of that -- will be right back. Well we're talking about the effort really to level the playing field in and that. Probably clears it up it's about local stores have to charge sales taxes. If you order something online and catalog in most cases you don't. And so that is unfair and that's were talking about let's go to Nancy. -- In addition our taxes -- all. I am tech. Impact in the nation's number one. It it taxes people. -- ink and and eat meat corporation. The credit to. Maybe she didn't tax credit is bad and that more money from this -- And all I noticed if you order something on line in the company had -- ER a store -- -- -- stock -- else. Yes you absolutely do it and done and that is an important note. Well yes. It and -- -- regardless of what but what sales tax and yet we do have a high sales tax that means that we've seanez giving war. Of an incentive than any body else than a lot of other places too. To spend their money in a way that doesn't. Come back into the local economy but -- if and if if you have any level sales tax you still have. In a situation where your -- of who we were basically paying people to. Take their money away and when you know somebody buys a the book and Octavia books it's benefiting the local economy in a lot of different ways for Smart employee -- live here we. A lot of our supplies come here are. We do our our advertising here we support. A local public radio station week. When we have an event we go to our local wine store to buy wine for the event in so many ways this week. You know were re circulating that money in our economy as well as where increasing the quality of life here by what. We put a -- here though of what what she was saying about on the camera store losing. 30%. Of its not big item sales that's huge at what point did they decide you know what I can't afford it anymore yet what and then we lose that store. And what point do they say when activists we're not gonna keep these items in -- store or you know so that there what they can provide. Becomes a lesser thing for it -- Local pin and in one of the need to point that Nancy made she's correct that we do you have one of the highest sales tax rates in the country. And there's a lot of reasons for that week oh we have -- overall tax rate however one of the lowest in the country because we don't tax things like property taxes. The way that other states do so is that the point the fact of the matter is. A state budget in a city budget it to to employ police and firemen and do health care and higher education all the stuff that that municipality in in fix streets and roads. You know our government have to -- on me and they're going to they're going to -- Q1 way or the other balance their budgets. We just happened that put more on sales taxes. And we also -- state that a third of our total revenues come from sales taxes which is why this presents an even bigger problem for Louisiana. Then it does for others -- Right fascinating discussion I wish we had more time I'm so grateful to our callers. And to the four people in this room and and say we'll do this again because it's it's obviously piqued interest panda we need to educate herself system that we have to deal with every day yes we can come back. But I really really appreciate your being your stay with us we'll be right back. Again we're talking about fairness it's all about. Making the of the -- level playing field for. People -- brick and mortar. Stores just make them fair to those who were selling online Perry yes -- Yes thank you Angela on so to tackle this issue we're going to be forming a coalition and -- -- In partnership with state local that's going to be comprised of local business says an elected officials that are being negatively impacted by the spill. To lobby our congressional delegation in congress to enact this bill. And we're considering expanding it beyond Louisiana to a national coalition similarly to how we did for flood insurance. And this coalition it'll be free of charge for folks to participate and I -- low blow in. Participation wait to get involved and stay up to up to date with. Information and how the bill is moving through the process of any business owners or local elected officials at a listening are interested in joining the coalition. I -- encourage folks to email me C Burney at -- ink dot -- Or -- you can also find my email address. At our website as well. -- -- thank you very much all of view. I will do it again OK it's a 1000 dollar vacation cash contest the code word this hour is part PA RT. Text the code word part 272881. That's 72881. For your chance to win 1000 dollars nationwide without ever putting down your phone. Your chance and an easy 1000 dollar vacation cash is just one text away listen for the next code word before the top our news at 5 PM. We never charge for tax but individual plan text and data rates apply good luck from Smart radio -- and WW well.

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