SOURCE: Electronic Retailing Association

December 06, 2007 11:57 ET

Electronic Retailing Association Fights for Fair Internet Tax

ERA Supports Electronic Retailers and Small Online Businesses

WASHINGTON, DC--(Marketwire - December 6, 2007) - The Electronic Retailing Association (ERA), the only trade association that exclusively represents electronic retailers, is strongly against taxation of Internet transactions that would impede the development of e-commerce and would impose substantial added costs and compliance burdens on electronic retailers. An urgent industry and legislative concern, the collection of taxes on Internet transactions is an issue that must be dealt with thoroughly and fairly.

"In a very short amount of time, the Internet has become an unprecedented marketplace where the playing field is level for retailers both large and small," says Barbara Tulipane, ERA President and CEO. "The Streamlined Sales Tax Project and its provisions would create a cost-prohibitive barrier for smaller retailers who are the lifeblood of our economy."

While the Streamlined Sales Tax Agreement (SSTA) was originally created to simplify multiple taxing jurisdictions, right now, the plan will make commerce more complicated for merchants and consumers. For instance, with 7,500 sales tax jurisdictions in the U.S., there could be as many as 15,000 tax rates to administer. Making electronic retailers responsible for computing, collecting and remitting tax for thousands of jurisdictions with different rates and coverage is unfair and will significantly harm small business expansion and the growth of e-commerce.

"The SSTA is a moving target. Its supporters claim that they have a streamlined collection system, but in fact their proposal has grown in complexity over the years due to the many interested parties," says Edwin Garrubbo, CEO of Creative Commerce. "It would be a nightmare for retailers to implement this system."

In addition to collecting tax for thousands of jurisdictions, a direct marketer must "eat" the difference if a customer fails to remit the correct tax when paying by check -- a problem that traditional retailers do not confront. Also, in-state retailers benefit from a wide variety of state and local government services and programs that are not available to out-of-state merchants. Further, delivery charges on Internet purchases usually exceed the amount of sales tax on those same goods -- so remote sellers have no price advantage.

ERA believes additional time is needed to reach agreement among all affected parties on a rational, practical and simple system for assessing and collecting taxes generated from Internet sales of goods and services.

For more information visit www.retailing.org.

Contact Information

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