Members of the US Senate approved a bill on Monday that would allow states to charge sales tax on purchases made over the Internet. The Marketplace Fairness Act received 69 votes in favor versus just 27 votes against. Riding a wave of support from President Obama, the bill now moves to the House of Representatives for consideration.
The Marketplace Fairness Act aims to overturn a ruling by the Supreme Court in 1996 which said out-of-state retailers typically don’t have to collect sales tax online unless they have a heavy business presence in the state the sale is made in. This is how a number of retailers on the web get away with not charging sales tax – an unfair advantage according to members of the Marketplace Fairness Coalition.
Retailers like Best Buy, Macy’s and Wal-Mart are all in favor of the bill as they feel it would help to level the playing field. Those against the bill see it as little more than a multibillion-dollar tax hike against American consumers.
Others like eBay CEO John Donahoe argue that the proposed changes would create an unreasonable burden for small business owners. Just last month, the executive sent an email to eBay members urging them to contact their representatives to let them know they were against the bill. Donahoe noted in the message that the legislation treats eBay users the same as big multimillion-dollar online retailers like Amazon (a company that supports the bill’s passage).
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