Another post that has nothing to do with real estate but I couldn’t help myself. The ink hasn’t even dried on Quinn’s signature and already the Internet Sales Tax bill he signed yesterday is a failure.
A huge problem for the city and state is that they don’t collect tax revenue on Internet purchases to fund their profligate spending. A huge problem for local bricks and mortar retailers is that they have to charge customers the exorbitant sales tax charged by the city and the state and consequently customers are driven to online purchases. Worse yet…people go into local stores to check out the merchandise and take up sales associates’ time and then go online to buy the product. This is driving brick and mortar retailers out of business.
So the legislators did what legislators do and they passed a law, which was signed by the governor yesterday, that imposes the state portion of the sales tax (6.25%) on Internet retailers that have more than $10,000 in annual sales in the state of Illinois. However, there is another twist in the law – and maybe someone else can explain to me why all these laws have this twist – that only imposes the tax if the retailer has affiliate sellers in the state.
The Law Of Unintended But Predictable Consequences
Unfortunately, the law of unintended but predictable consequences trumps all other laws. As you might expect Amazon is the most impacted online retailer out there and they promptly did what they have (almost) always done in every other state that tried to do this. At least 14 hours ago they sent a notice to all their affiliates in Illinois and terminated their relationship. In other words with a single click on the keyboard (the emails were already set to go out) they undid the law.
This is a complex problem. On the one hand the government wants to level the playing field between online retailers and the local retailers, which is a noble goal. I know retailers that are on the verge of extinction because the playing field is not level. On the other hand the online retailers don’t receive any city and state services so why should they pay for something they don’t get? In addition, online retailers have a more efficient business model than local retailers and thus consume fewer resources – i.e. they are “greener”.
I don’t know of a good solution. If consumers were more thoughtful about how they made their purchases this wouldn’t be a problem. Want that store around the corner available for you when you want to hold the product in your hands? Better suck up the taxes and buy from them. Of course, this is asking too much. But maybe I can influence just a few people to do the right thing by relating my own recent personal experience making a high dollar purchase. I was shopping for a digital camera (no, I was not going to use it to take my own property photos!) and intended to research it online and buy it from Amazon. I quickly determined that I needed help so I decided to go to Central Camera, with the intent of buying from them and paying the sales tax and probably higher price. Those guys are awesome. George spent 45 minutes with me explaining the ins and outs of digital photography. It was worth every extra penny I paid. However, I worry that the next time I need Central Camera they might not be there.