Money Watchers: Taxing online retailers broadens state's tax base
Backed by U.S. Sen. Sheldon Whitehouse of Rhode Island, a new federal bill aims to tax big online stores like any other business at the point of sale.
The Marketplace Fairness Act wouldn't impose any new taxes. It would allow states to require web-based retailers to collect sales tax, just as smaller brick-and-mortar businesses are already required to do.
If the federal bill becomes law, the state sales tax is automatically lowered from 7 to 6.5 percent, according to state law.
Mark Murphy, editor of the Providence Business News, said Tuesday the proposed bill won't have much of an effect on the state's overall revenue.
"The increased tax you might take in, because now the Internet is taxed, would be essentially wiped out because of the drop. So in essence, it's no change," Murphy said during an NBC 10 Business Lunch interview.
Giovanni Feroce, CEO of Alex and Ani, said the company does about 18 percent of its sales online.
"We're kind of neutral looking at it," he said.
The Senate passed the bill Monday by a vote of 69 to 27 and getting support from both Republicans and Democrats.
"Ultimately, this bill is about fairness, so when you put it in that light, it's fine. One can support it. Obviously, I would love to see no sales tax and supporting the other direction, but I do understand why it was introduced and I don't think that it will hurt business and will help main street America," Feroce said.
Last year, Rhode Island lost more than $70 million from taxes that were not collected from Internet sales.