LANSING, Mich. (WWJ/AP) – Michigan Republican lawmakers are working to make online retailers collect the same sales taxes as brick-and-mortar businesses.
Republican Reps. Eileen Kowall of White Lake and Rob VerHuelen of Walker introduced “The Main Street Fairness Act” on Wednesday. The bills would require online retailers to collect a 6 percent sales tax at the point of sale and submit it to the state.
Kowall said the current “unfair advantage” for online retailers is hurting Michigan businesses.
Michigan Retailers Association chief executive James Hallan said more than two dozen other states have taken action to collect taxes on out-of-state and online retailers. He said waiting for a change on the federal level is “false hope.”
The new law would redefine physical presence to include affiliates with a physical presence in the state — the kind of affiliates that online giant Amazon.com and many other online retailers have.
Supporters of the legislation say closing this “tax loophole” will create hundreds of Michigan jobs and increase brick-and-mortar sales in the state.
Kowall introduced similar legislation last year, but it didn’t make it through the legislature.
Officials with the MRA say the state is missing out on $400 million to $450 million a year in sales tax by not collecting it on online sales. House Bills 4202 and 4203, it’s estimated, would raise $40 million to $50 million of that.
People who buy online are supposed to voluntarily pay a 6 percent “use tax” in lieu of the sales tax. Almost no one does.
In the recent holiday shopping season, online sales rose 11 percent across the nation, compared to 3 percent for total retail sales,and they continue growing at a faster clip than those at brick-and-mortar retailers, Hallan said.
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