Tempe's Changing Hands Bookstore is set up for customers browsing its shelves in search of a good read, co-owner Gayle Shanks said.
But some of those roaming the aisles at their leisure return home to buy from online retailers that among other advantages don’t charge sales taxes for transactions.
“We hear it all the time,” Shanks said. “We don’t want to be a showroom for Amazon.”
Changing Hands is one of many brick-and-mortar retailers celebrating an agreement between Amazon.com and Arizona that will require the online retail giant to begin collecting the state’s 6.6 percent sales tax early next year. These traditional retailers hope to see more e-commerce companies follow suit.
“What we’re trying for is parity,” Shanks said.
Garrick Taylor, spokesman for the Arizona Chamber of Commerce and Industry, said the group plans to ask Congress to address the issue of online sales taxes without creating a disincentive for e-commerce.
“We believe in a system where brick-and-mortar sellers are not at an economic disadvantage from their online competition,” he said.
Michelle Ahlmer, executive director of the Arizona Retailers Association, said that while she doesn’t see other online retailers reaching similar agreements the Amazon move will push the issue forward.
“For us it’s all about the ability to compete and to stay open and not have empty storefronts,” Ahlmer said. “The fact that the Department of Revenue has reached this settlement with Amazon gives our congressional delegation some backup.”
Arizona lost an estimated $317.4 million in uncollected sales taxes for online purchases during 2010, costing approximately 5,400 people their jobs, according to a study by Elliott D. Pollack & Co., an economic and real estate consulting firm.
Danny Court, senior economic analyst with the firm, said that e-commerce sales are growing faster than normal retail sales as consumer preferences shift. Traditional retailers could face further sales declines without a law requiring online sellers to collect sales tax, he said.
“Brick-and-mortar stores may be at a competitive disadvantage for more reasons than just that they have to charge a sales tax,” Court said. “But that certainly is an inequity.”
The study predicted that such a law would result in a 24.3 percent shift in purchases to local stores.
Dennis Hoffman, director of the L. William Seidman Research Institute at Arizona State University’s W.P. Carey School of Business, said that while the Amazon settlement is a step in the right direction, there’s more work to be done.
“The current Amazon customers may just simply move to another remote seller that allows them to avoid the tax,” Hoffman said. “These issues will have to continue to be addressed.”
Hoffman also chairs the online retail working group for Gov. Jan Brewer’s Transaction Privilege Tax Simplification Task Force.
The more Amazon is taxed by individual states, the more effort the online retailer will put behind lobbying Congress for a bill requiring all companies to collect taxes on online and remote sales, Hoffman said.
Amazon currently has agreements to collect sales taxes for eight other states.
Arizona’s sales tax, called the transaction privilege tax, implies that retailers are obligated to pay and remit the tax for doing business within the state of Arizona, said Stephan King, chairman of the Arizona Society of Certified Public Accountants.
“The settlement is nothing more than having Amazon comply with the current system,” King said. “There are a lot of other retailers now who don’t pay sales tax in the state of Arizona.”
Rich posted at 10:13 pm on Thu, Nov 1, 2012.
Since the fifties, the art of literature has been held captive by corporate publishing and brick and mortar stores. When it opens up, lets artists take a shot at the money, what happens, the entrenched interests have to get in it. This is just censorship, it's keeping the indie artists and publishers from the market, freezing out art, literature. At least recognize what it is. It is an attempt to keep control of the art of literature. It's sick, an attempt to freeze your society. How many POD books do you have on the shelves Gayle? The people who lose money and time for artistic dreams, how many of them Gayle? This is a giant step backwards for an entire society, for art. The competition is from people who maybe get ten bucks every two months for their dreams. Amazon gives them a shot. And you're letting the politicos take it away. Shame on you!
Melete posted at 4:35 pm on Thu, Nov 1, 2012.
Not so much... For me, in the post-layoff, permanently underemployed world, it simply means that things I could sort of afford if I didn't have to pay taxes and shipping become things I obviously can't afford. I won't buy them from Amazon, but I won't buy them from anyone else, either. I'll just do without.
Some of us won't pony up money we don't have. Business owners will need to provide some jobs to make it possible for us to buy from them.
mouseman42 posted at 12:53 pm on Thu, Nov 1, 2012.
While the fact the department of revenue has reached this agreement, helping out the state is a good thing, it will have zero affect on Brick and mortar business. anyone who thinks People are shopping on line for the reduced tax benefit are only fooling themselves. Online sales is much more about convenience.
People are NOT making the drive to a B&M store, looking at the price, pulling out a calculator and working out the cost with tax. If they do any comparison, they are comparing the listed price to what they can find online... a price comparison that does not involve tax.
The 'Myth' that people use B&M stores to 'window shop' and then are buying online, is a 'pity party' that retailers are telling themselves to feel better about why their business is going down, instead of doing research into their customers and supplying what they want... how they want it.
Most online sales is about convenience that the B&M retailers are not providing their customers. Taxes have little to no affect in that equation.
hamguy posted at 12:46 pm on Thu, Nov 1, 2012.
Level the field or not, I'm tired of Arizona grabbing every chance they can to tax something and then wasting the money. I agree to tax in principal but not in the hands of these spendthrifts. As far as taxing online stuff, doesn't much matter as the online store has a much lower overhead anyway so will always be a bit ahead. I don't like online shopping because of the shipping and the robo operators if there is a problem. Give me brick and mortar that meets my needs and I'll always use it first.
xyno posted at 11:58 am on Thu, Nov 1, 2012.
Katy, it does a lot to level the playing field. The "brick and mortar" stores have always had to collect sales tax, property tax, ect. Those online places you buy your viagra from don't pay. That's not fair
Katydid52 posted at 10:05 am on Thu, Nov 1, 2012.
Most items I purchase online are cheaper than in the stores - and by more than 7%. Amazon sells used books also, so a book in the store that is $25 might be $5 used. Sites that sell supplements are often far cheaper than stores for the same exact item and brand.
I don't have a problem with Amazon, or any other online retailer, collecting tax, but it really doesn't do much to the "playing field".
xyno posted at 9:38 am on Thu, Nov 1, 2012.
All online retailers should be forced to collect sales tax.
SiDGreat posted at 9:29 am on Thu, Nov 1, 2012.
This won't make that big of a difference for the brick-mortar places. They will still be used to 'test-drive' products - but it may drive business away from Amazon