LANSING — Officials with the Michigan Retailers Association held a press conference in Lansing Wednesday to back the introduction of a law to extend the state’s 6 percent sales tax to some Internet sales.
Its sponsors, State Reps. Eileen Kowall (R-White Lake) and Rob VerHeulen (R-Walker), call the legislation the Main Street Fairness Act.
“Michigan’s retail industry continues to face an unlevel playing field that acts as a drag on our state’s economic recovery,” said MRA president and CEO James P. Hallan. “It’s time for lawmakers to act. It’s time to take away the unfair competitive advantage the state has been giving to out-of-state businesses that create no jobs, pay no taxes and support no communities in Michigan.”
The law wouldn’t extend the sales tax to all Internet sales. Current law provides for collection of sales tax when a retailer has a “physical presence” in the state. 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.
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.
“Michigan retailers struggle to compete when they continue to face a 6 percent price disadvantage against out-of-state, online merchants,” Hallan said. “The current situation is unfair, it’s wrong and it kills Michigan sales and jobs.”
Hallan noted that the House Republican Caucus last week included Main Street Fairness on its legislative agenda. He also pointed out that 26 other states have taken action to collect taxes from Amazon and other out-of-state, online retailers. In fact, Amazon announced Monday it will start collecting Connecticut’s sales tax, and it began collecting Arizona’s last Friday.
Michigan Retailers Association represents nearly 5,000 members and their more than 15,000 stores and websites in Michigan. Retailers provide more than 850,000 jobs in Michigan.