LITTLE ROCK — An alliance of local business and municipal leaders from around the state voiced support Thursday for an Arkansas congressman's effort to level the playing field between local merchants and online-only retailers in tax collections.
LITTLE ROCK — An alliance of local business and municipal leaders from around the state voiced support Thursday for an Arkansas congressman’s effort to level the playing field between local merchants and online-only retailers in tax collections.
Members of the newly formed Arkansas Alliance for Main Street Fairness fell behind legislation by U.S. Rep. Steve Womack, R-Rogers, that would allow states to enact laws to require most Internet merchants to collect the same taxes that businesses in the states collect.
Womack co-sponsored House Resolution 3179, known as the Marketplace Equity Act, with U.S. Rep. Jackie Speier, D-Calif.
“Allowing out-of-state businesses to sell items without charging a sales tax creates a competitive disadvantage and is not fair,” Craig Underwood, whose family owns Underwood’s Fine Jewelers of Fayetteville, said during a conference call organized to promote the legislation.
A University of Tennessee study released last year estimated that about $23.3 billion in state and local taxes will go uncollected because of online purchases in 2012. Arkansas state and local governments will miss out on about $236.3 million in sales tax revenue, according to the study.
Womack, who filed the resolution in October, said he learned the importance of local sales tax revenue while mayor of Rogers.
“I recognized early on that the backbone of our community, the brick-and-mortar facilities, were playing at a terrific disadvantage,” he said.
“I think it’s just a matter of time (before) we’ll look up and see that these brick-and-mortar retailers are going to be gone and we’re going to be wondering how did this happen, and we’re going to look back to our inability to engage the proper legislative programs to level this playing field,” the congressman said.
Under the proposal, online business with annual sales of less than $1 million would be exempt from collecting taxes.
Womack said he included the exemption to protect small or new online businesses, but that he is willing to reconsider the cap.
“I am not married to that,” he said, adding that “we need to do something to protect the upstart small business startup.”
Asked if consumers would support a measure that would raise their taxes, Womack said his proposal “is not a new tax.”
He said a majority of the states, including Arkansas, have already enacted legislation requiring consumers who make online purchases to pay state and local sales taxes on their own.
“This should not affect you if you are already doing what you are lawfully obligated to do now,” he said.
However, some of the business owners participating in the conference call noted that few people who make online purchases pay the taxes — or even know they are supposed to.
Also participating in the conference call were Loyd Stanley, owner of Stanley Jewelers Gemologist of North Little Rock; Jay Beachamp, president of Bedford Camera & Video of Fort Smith; Poly Martin, president of the Arkansas Grocers & Retail Merchants Association; Randy Zook, president and CEO of the Arkansas State Chamber of Commerce/Associated Industries of Arkansas; and Don Zimmerman, executive director of the Arkansas Municipal League.