WHILE some Hoosiers might think of purchases of products and services from online retailers as a way to beat the system by avoiding the imposition of state sales taxes, they’re actually short-changing the state in which they live and their merchant neighbors who have a physical presence in the community.
Although an effort to persuade the Indiana General Assembly to enact laws that would require online retailers to collect sales taxes is being pushed by a group called Indiana Merchants for Tax Fairness, there are plenty of reasons for Hoosier consumers to get involved as well.
The key issue raised by merchants with a physical presence in the state is that of fairness. They are definitely at an economic disadvantage competing with online merchants who can offer products at much lower prices.
That’s especially true of large purchases that can represent a difference of hundreds of dollars in the total price paid by consumers simply because the 7 percent tax is not assessed.
While consumers might get a price break, they might also compare that benefit to the negative potential of this practice in their lives.
Faced with lower revenues, businesses with a physical presence in the state will be forced to make cuts in their operations, primarily by reducing their workforce. Some retailers simply will be unable to survive this cost pressure and will go out of business.
That means city and county governments will be forced to deal with reduced revenue, not just in loss of income taxes paid by the jobless but property tax receipts from the defunct businesses.
The loss of the sales tax receipts alone from online merchants amounts to between $40 million and $114 million annually. Those numbers could have saved a lot of jobs and services the state was forced to eliminate during the recent financial downturn.
This issue is about much more than saving money on purchases. It is also about saving jobs and services for the people of Indiana.
It is mostly about fairness.