, Gloucester, MA

September 23, 2012

Groups renew push for online sales tax 'fairness'

From Wire and Staff Reports
Gloucester Daily Times

---- — BOSTON — Frustrated with the pace on Beacon Hill, eight Massachusetts mayors have written to Gov. Deval Patrick on Wednesday urging his administration to “move aggressively” to reach a deal requiring the online retailer Amazon to begin collecting sales taxes before the Christmas shopping season begins.

The mayors, including Boston Mayor Thomas Menino and Salem Mayor Kim Driscoll, called small businesses the “lifeblood” of their communities, and argued that forcing Amazon to collect the state’s 6.25 percent sales tax would put them on an equal footing with stores that routinely collect taxes at the point of purchase.

“They provide our citizens with full and part-time jobs, are the core of the commercial tax base, and form the vibrant center of our community downtowns,” the mayors wrote.

Earlier this year, Amazon purchased a robotics company in North Reading and opened a research office in Kendall Square in Cambridge, establishing the “brick and mortar” nexus that local officials say should give the state the authority to force the company to collect the taxes from online shoppers.

More than a dozen states across the country, including many led by Republican governors, have reached deals with Amazon over tax collections, including Nevada and New Jersey. Amazon began collecting sales taxes in Texas on July 1, and this month started collecting taxes in California and Pennsylvania.

But according to the Alliance for Main Street Fairness, Massachusetts has lost out on $600 million in sales tax collections from e-commerce since 2007, including $132 million in 2012 and $116.8 in 2011. The Main Street fairness coalition — a group of retailers, local elected officials, labor unions and trade associations — estimates that by forcing Amazon to collect and remit sales taxes on purchases made by Massachusetts customers, the state could realize between $25 million and $45 million in additional annual tax revenue.

The issue of drawing sales taxes from online retailers was also spotlighted on Cape Ann last October, through a two-part national series showcased in the Times and produced by the CNHI News Service and the Times’ parent company, Community Newspaper Holdings, Inc.

Peter Webber, now senior vice president of the Cape Ann Chamber of Commerce, noted at the time that, while it’s difficult to assess the effect of Amazon’s virtual sales-tax free status on local bookstores, for example, the issue is certainly “a matter of concern.”

Many local business, he and others said, provide more than retail service to customers – with Rockport’s Toad Hall Bookstore, for example, serving as something of a community hub, with tickets to local events and posting community notices. But storeowners and managers also told even seeing shoppers visit a local shop, take out their iPhones, and take a photo of the cover so they’d know what they’re looking for when they go online.

“We understand that the ultimate solution to this problem rests with the federal government and we hope, in time, it acts appropriately to correct this imbalance,” the eight mayors wrote. “But Congress is not going to act unless pushed, and Massachusetts – like we have on healthcare reform and many other issues in the past – can once again demonstrate national leadership on this vital issue.” The mayors of Boston, Salem, Braintree, Easthampton, Malden, Methuen, Peabody and Revere signed the letter; it did not include input or a signature from Gloucester Mayor Carolyn Kirk.

Patrick in June called tax agreements between states and Amazon “delightful and encouraging” and said his administration would begin talks with Amazon. But Patrick said last week that he had not spoken to Amazon’s CEO although talks had begun at the staff level.

“It’s got to start there so one step at a time,” Patrick said last week.

Online retailers have been protected from collecting state sales taxes since a 1992 Supreme Court ruling said they had to collect sales tax in states where they have a physical presence.