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Washington Retail Insight

Durbin Says Lack of Online Sales Tax Means Some Main Streets ‘Could Disappear”

By J. Craig Shearman
Washington Retail Insight
February 9, 2012

A key sponsor of sales tax fairness legislation pending in Congress said this week that consumers browsing on Main Street but buying online to avoid paying sales tax and threatening to put many local stores out of business.

“It’s not a stretch to say entire Main Street shopping districts could disappear,” Senate Majority Whip Richard Durbin, D-Ill., said, quoting comments from a constituent during remarks on the Senate floor Tuesday.

“I talked to a lot of local businesses in Illinois,” Durbin said. “They share with me the frustration they have currently now with customers coming into their shops and businesses, looking for everything from running shoes to sporting equipment, you name it, and then … they sometimes pull out their phones, turn on an app and take a picture of the bar code … to find out where you could buy that very same product cheapest on the Internet.”

Durbin cited a shoe store forced the lay off workers and ultimately close “strictly because of Internet sales.”

“These local business invest in our communities, they hire local workers, they pay local property taxes,” Durbin said. “They deserve a fair shake.”

Durbin is the lead sponsor of the long-pending Main Street Fairness Act and a co-sponsor of the more recent Marketplace Fairness Act, both of which would make it easier for states to require Internet sellers to collect sales tax the same as local stores. Under a 1992 U.S. Supreme Court ruling, most online sales to untaxed, costing state and local governments close to $25 billion a year and placing increasing pressure on local stores still required to collect.

Durbin said most consumers don’t know that they are supposed to report untaxed sales and pay the tax anyway. Legislation requiring all retailers to collect is the only answer to the problem, he said.

© 2012 National Retail Federation

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