A bill designed to force online retailers to collect sales tax for the products they sell was approved Tuesday by a Senate committee.
Look around your home and you’ll see myriad items purchased at a local retail store — both large and small. Now, look around your community at the roads, parks, elementary schools and utility lines. That infrastructure, and the key public services that support it, are funded in part by sales taxes that are collected and remitted to the state by businesses that have made a commitment to the state and its citizens.
Years ago, Utah lawmakers decided that an efficient way to help build and beautify the cities, towns and state where we live and work was through a sales tax charged to consumers who purchase consumer goods. Retailers were asked to assist in the collection process. All retailers were required to collect these taxes, and all consumers were asked to pay an equal amount, regardless of where they purchased the product. This method worked very well over the years to make our community a better place to live and to help educate our children and prepare them for the future.
However, with the advent of the Internet, not every retailer contributes to its community by collecting sales taxes. Out-of-state, online-only retailers are exploiting laws written in the pre-Internet era that allow them to avoid collecting sales taxes. Meanwhile, local brick-and-mortar businesses collect these taxes on purchases every single day.
As a result, some online-only retailers based outside of Utah are allowed to not collect sales tax and remit these taxes to our state. This inequity in our tax policy inherently favors certain retailers, who have little to no connection to Utah, over local businesses and the tens of thousands of jobs they provide Utahns across the entire state.
The free-market system works best when there is an even playing field for all businesses. In fact, retailers of all sizes thrive on competition — as long as that competition is fair. If the current tax system remains in place, out-of-state online sales companies will continue to have an unfair advantage, reducing the amount of tax money that goes to educate our children, pay for our needed services and potentially reduce other taxes.
SB226, sponsored by Sen. Wayne Harper, aims to correct the imbalance and would require certain out-of-state, online-only retailers to collect and remit sales tax. Last week, the Utah Senate passed SB226, and the Utah House of Representatives is expected to vote on the bill soon.
SB 226 has the support of the Utah retailers large and small, including RC Willey, Standard Optical, Smith’s Food & Drug, Harmons Grocery and national retailers with local ties, such as Lowe’s, Target, The Home Depot, Walgreens and Wal-Mart.
It’s time to level the playing field for all retailers.
Scott Hymas is the CEO of RC Willey, which was founded in Syracuse in 1932 and now has seven total Utah stores, as well as locations in Idaho, California and Nevada. RC Willey employs 1,300 associates in Utah.