It’s not often we get to say this: We agree with both Republican Gov. Paul LePage and Democratic U.S. Rep. Chellie Pingree.
We like that they’re both advocating for passage of a bill in Congress that would allow states to collect tax on Internet sales. That’s because the bill is about equal treatment for Main Street businesses and online retailers.
The Marketplace Fairness Act would allow states to collect sales taxes from businesses that sell items online to Mainers but don’t have a brick-and-mortar presence in the state. Currently online businesses, such as Amazon.com, are not required to collect and remit sales tax, while businesses with a physical presence are.
A significant benefit of the legislation is that it could provide a much-needed revenue boost for Maine. Since 2007, the state has lost $146.6 million in state and local sales and use tax revenue, according to a study conducted by the University of Tennessee. Creating an even playing field could help more businesses compete.
The problem will only continue to grow. Consider this: online sales have multiplied from $995 billion in 1999 to $2,385 billion in 2006. With no law in place to collect sales taxes, companies will continue to be incentivized to avoid their responsibility.
Local business owners lose out when customers browse through their items and then walk outside to purchase a slightly cheaper product on their smartphone. More power to intelligent shoppers, but at the very least businesses should be playing by the same rules.
Giving states the ability to tax online purchases at their point of sale is something even Amazon is supporting, as it would still be a strong competitor. The bill would not affect small e-commerce sites, as it would exempt sellers with less than $500,000 in annual sales.
Some people worry that the bill would create an undue burden on the economy — and maybe more study will show the exemption cut-off needs to be raised — but what will happen to the economy if local businesses continue to be placed at a government-approved disadvantage to web-based businesses?
LePage is correct. The legislation would not mean a tax hike but a way to collect money already owed. It’s a way for federal law to catch up with the reality of Internet sales.
It appears unlikely that the House will vote on the bill this summer, but it’s good that LePage and Pingree are speaking out now. Congress should get going and approve this bill to bring fairness to online and local marketplaces.
I don’t mind the sales tax. It serves to help pay for the operation of this state. I do mind that we continue to give tax breaks to the highest income earners in the laughable belief that they will create jobs with their new found wealth.
What few items I have purchased on line have beaten the retailers price by on heck of lot more than the 6% sales tax.
It would behove the retailers to compare their prices to that of online sellers. Emphasize their service over that of online sellers.
The tax bill passed last year eliminates tax on the 2% bracket. That is eliminating tax on $5,000 of income for single people and $10,000 for married. Exemptions will be raised to the federal amount for an additional $950 per exemption not taxed. For most that was taxed at 4.5%. The top rate was reduced from 8.5% to 7.95%. That rate starts at an income of $28,400. Hardly tax cuts for the highest income earners.
“BillyFiske from 14 hours ago in reply to MaineHiker
If they are yours they are also mine. What if we disagree on their use? Do
we put it up for a vote? Do I develop my woodlots before that right
is taken away from me? I have already done that to one of
them. Currently I only wish to take sustainable wood production
for my heating needs and taxes but I will not sacrifice 50% or more of the
value of these lots through restrictive action from those who think they
are too valuable to be developed.”
Hey, Billy Fiske!
There is a big difference between developing woodlots and building major
highways though western Maine and mountains or putting up 40 story bird
choppers along Maine’ mountain ridges and ruining the view-shed of Maine’s precious
places, building thousands of miles of hard access roads to the turbines,
putting in, at taxpayers’ expense, hundreds of miles of new transmission line
to carry the trickle of electricity to Rhode Island. My first night at Horns
Pond I spend with eight other hikers. Only one spoke English and she was a
young girl from England. This issue has other international political issues of
great importance attached to it. If you
love your trees you are not far afield from where I stand. I do not care one
iota about the financial wellbeing of millionaires who live in another World
and who are perfectly willing to destroy Maine’s wilderness, mountains and
lakes and ruin what’s precious to people around the World.
I love your trees… you can stand by me.
Recently I just purchased a product online for a total of $153.00, including shipping & handling cost that amounted to $20. The only reason I bought it online is because the product was not available in stores within a two-hundred mile radius. Now I need to return the product because it does not meet my expectations. It will cost me additional money ($15) for shipment.
Generally I still find products as cheap locally where I do not have to pay shipping costs. Besides, I do not mind paying a slight premium to support local merchants, not to mention the fact that I get to examine first-hand what I am buying.
Now that’s something we can both agree on!
LePage wants to collect more sales taxes so he can cut more income taxes for his rich friends. This is the same guy who convinced his republican supporters in the Legislature to cut state and teacher pensions because the state had fallen behind on its promise to adequately fund the pension system ( a broken promise) only to channel $200 million of the savings to tax cuts for the wealthy. I could support this sales tax on internet sales if the money went to infrastructure, education, environment, health etc. not additional tax cuts.
It isn’t just about raising tax money from sales, it’s equalizing the selling power of retailers with brick and mortar locations. You could just eliminate the sales tax to achieve the same benefit, but then there would be zero contributions and other taxes would need to rise.
There are plenty of reasons why people purchase items online – selection, ease of use, and lower cost. Many times the lower cost is offset by shipping charges, but that only makes the product similar in cost to the brick and mortar store in which case the online retailer provides another incentive to purchase online: avoiding sales tax on goods. Those goods may have been purchased at a local store but are now purchased online to avoid the extra cost of sales tax. This is also an issue when you have two competing online retailers with the same goods, services, and shipping rates but the one without sales tax receives more business because of the incentive.
It could be argued all day whether we should have a sales tax, but when you boil the issue down it isn’t just about increasing government revenue, it’s about increasing local revenue too. A way around forcing sales tax onto goods may be to push for shipping taxes, but that may cause even bigger issues, not to mention the Commerce laws already in place preventing some of these taxes and/or tariffs from being imposed on interstate exchanges. But then again online sales and interstate commerce have been increasing dramatically over the past 15 years.
Until the reality of a fair price to pay came to light through the internet most of us paid and believed the cost of a good was in fact the asking price. Granted the sales tax was not as much as it is now, or the junk food tax was yet to be enacted, but the price charged for something presumably was what it was worth. Times were good for most Maine companies. Just this week LePage Bakeries sold for $370M. A 100 year old Maine company. (Thursday, May 31, 7:45 AM Flowers Foods (FLO) buys privately-held Lepage Bakeries for $370M in cash and
stock.)
Now though, we have the profound choice and realization that for all the years we would ordinarily buy from our neighbors, that it was enough to sustain our community. That’s how things worked in our town, which has now dwindled to become four thrift shops, a soup kitchen, bakery, bar, and restaurant. Hannaford attempts to compete against Walmart, and always promises lower prices, but, is often off by as much as $1 per item. Or, five cents in sales tax on the dollar.
We have no other viable alternative than to shop online. Forget the sales tax, but instead realize that the Maine St. economy is in a tail spin.
The list of cost savings to what I paid at Maine stores/companies to that which I now buy online isn’t even close. I can buy three times more goods online, than what I used to purchase at Maine companies. Basically, I feel I’ve been ripped off!
I completely agree. I think online businesses are a great way to provide competition in a market that was clearly devoid of any. Granted sales tax isn’t a deterrent in most purchases, I just wanted to illustrate there are situations where it can be a factor.
Now granted catalog purchases and shipping have been around for quite some time, Internet purchasing has provided so much more of an opportunity for individuals to save on goods that they may otherwise have paid more for. But there is a reason why brick and mortar costs more. Buying power, shipping, storage, and risk and reward.
Walmart is always a great example of buying power and how they can charge less for something things others need to charge more for – buying power. They can undersell anyone when they’re buying millions of products from manufacturers and getting a discount for doing so. Walmart is so good at this that some manufacturers depend on Walmart’s business model to survive.
Amazon learned a lot from Walmart, but they replaced the brick and mortar with shipping. They still house a lot of the products that are sold online, but the goods go to the users. In many situations they just bargain with order fulfillment companies (warehouses) to provide the goods and shipping. Amazon becomes merely a middle man, same as with Ebay (but that’s different).
Free market systems have a tendency to eat themselves. They push the boundaries of what they can get away with and once the system reaches critical mass it implodes or explodes. The system works really well until this happens, but honestly it is part of the process. The system needs to fail to rebuild and become better.
I doubt in the past that you saw goods with in store mark ups of 100-200%. Did it happen, yes, was it the norm, no. But the reason goods were so much more expensive is the infrastructure in place to get those goods to store fronts wasn’t there to make it cheaper for you as a consumer to receive it on your own. But imagine if UPS closed the Brewer distribution center, shipping prices would go up as a result to the Bangor region. You’d be more reliant on a smaller store to receive pelleted goods from larger distribution centers to get the goods you need. So even thought the system is cheaper, it is more reliant on more and more systems. If one system fails and the others are dependent on that system then all systems fail. But that’s the price for cheaper goods.
Auto parts from the car dealer is the example I am using from past experience. It is as basic a law of supply and demand as it gets. I need the part and the dealer has a monopoly on the part. To that end most auto shops will not install parts purchased online. fcpgroton.com and I’ll spot you 20%
I choose to refrain from further negative comment regarding pricing in the marketplace, because of the nature of the competitive force where free market supply has crushed so many Maine merchants. I can buy a new car part for the cost the repair shop will sell me one used.
I am not at all satisfied with the resolution that LePage or Pingree have sided with as a ways and means to help Maine business. I’m not against the sales tax or use law in context. They are both wrong not to question why the tax laws in place are not advanced, and corrected to achieve an equilibrium in the marketplace that is fair to the consumer as it is to the merchant. Pitting the consumer against the merchant as if we live on a playing field is obscene.
I have no interest of intent in filling out a form to declare items that I’ve purchased online. Most people should, and do for the amount paid in sales tax each year when that offsets their filing of federal tax returns. Just as gamblers should keep track of the money they’ve spent for lottery tickets, or at casinos. Because, those losses as are the gains part of their own tax records.
Well SAID!!!!!
All well and good with the proposal but…. What happens to the mom and pop business based in Maine and paying all their taxes here. Now they have to invest in the software and subsequent updates to collect tax for other states and then remit it on a timely basis to those states. (Keeping the software up to date would be a constant process.) Furthermore many states have a state wide sales tax, a county tax and also some municipalities a sales tax as well. If all you would save is the sales tax on slightly cheaper purchase by ordering on the internet believe me it is not worth it. Wait for delivery, possibly pay for shipping are just a couple of hindrances to that 5% savings. Usually the item needs to be significantly cheaper to go through an internet purchase.
Good point. It would be a nightmare for small business. Fortunately, this state already has a law to deal with taxing out-of-state purchases!
It could cost butt loads of money, but than again it may not. It depends on the system already in place for online purchases. Most online retailers do not maintain their own systems, many use 3rd part cart and checkout systems that manage transactions. These companies would more than likely be responsible for calculating the taxes and then either sending those taxes along to the state or back to the retailer for redistribution to the state – though I imagine most businesses would prefer their vendor handle the those transactions, just as the already do with authorizing CC payments and bank money transfers.
Depending on the ticket item depends on the savings with taxes. 5% isn’t much on small ticket items, but others like TV’s, computers, and other household appliances can be very expensive. It is a tax hike when it’s forced onto every purchase, but when you have the same TV provided by Amazon as Joe’s TV in Maine (who has the same sales and shipping rates as Amazon) but Joe’s requires taxes on their products sold to other Mainers, which online retailer is going to get the business?
” Since 2007, the state has lost $146.6 million in state and local sales and use tax revenue,”
What do you mean “lost” money? Republicans have been arguing that you can’t count the Bush tax cuts as “losing” money as it is a person’s money, not the governments. So why does that logic suddenly change now?
“Creating an even playing field could help more businesses compete.”
What do you mean an “even playing field”? Doesn’t that sound a lot like socialism/marxism/whateverHannitytellsmetosayism? Doesn’t Amazon deserve their rights without government regulation?
I’m not against putting a sales tax on online orders, what I’m against is Republican hypocrisy. Making arguments and proclamations when it’s convenient, and then doing a complete reverse when it’s not.
“What do you mean “lost” money? Republicans have been arguing that you can’t count the Bush tax cuts as “losing” money as it is a person’s money, not the governments. So why does that logic suddenly change now?”
I think it’s because these are purchases made that are assumed would have been made in-state if there had been no internet or telephone sales. That being said, the money isn’t lost because Amazon didn’t collect the taxes-it’s lost because Mainers didn’t pay the taxes.
I disagree with the law. I think it’s an unfair to the business. We should already be paying these taxes.
I am incredulous that they don’t mention the purchaser’s responsibility to pay the sales tax to the state!!!
Ha ha, ain’t free enterprise/free markets wonderful, I thought it was all about less government less taxes, woops. Mark my words …. all that will be left for local business is services, nothing else. It’s the New World Order, better be careful what you wish for.
This tax isn’t new.
Of course the BDN agrees with Gov. LePage – he wants to rasie taxes! So reliably liberal you are.
This bill will not raise taxes – it will collect taxes due the State of Maine on purchases made via internet from businesses located outside the State. There is a line on Maine income tax returns which requires that you report the amount of purchases you made for goods brought into/shipped into Maine for which you did not pay the 5% sales and use tax. If you are properly reporting those purchases, you will not feel any effect from this bill. If you are not properly reporting, then you will now be paying the tax you owe under current law; that is not a tax increase, that is paying your tax bill. See the Maine Revenue website for details.
The State of Maine did nothing to earn that money and I don’t see any reason why it should be paid.
You should address that with your representative. Until you can convince the legislature to repeal that provision of the law, you are required to comply. Our opinions regarding the validity of the various laws do not give us allow us to choose whether or not we comply. Our recourse is to work within the framework of the constitution of the state to repeal those laws that we believe to be unjust.
Absolutely! Great points!
I don’t need to address it with anyone if I just choose to buy elsewhere. Democrats have made shopping elsewhere a better deal than shopping in Maine and now they are trying to force customers to buy their overtaxed products. Not going to happen and if it does I can always move elsewhere as well. You drive out anymore people and you will really start having tax issues.
5% sales tax is “overtaxed”?
Is that the only tax you have to pay in this state?
It will never happen in my lifetime. Lepage can rant and point his finger all he wants, all he is raising is his blood pressure. The time it will take for all 50 states to agree with this proposal is ridiculous. Cut back on the spending not raise the revenue.
I don’t know why more people don’t acknowledge this. I do NOT like LePage, but this is not a new tax and I don’t fault him or Pingree for wanting to collect it.
However, it is our responsibility.
clarafire – You are correct. However, as I recall my payments every year for use tax, I estimate (key word estimate) the total dollars spent on internet purchases. Don’t tell anyone, but I under-estimate that amount every time. I do not physically tally the total with my receipts, even though I keep every receipt. So, it would be a tax hike for me, simply because I would pay more in taxes. I know what you’re thinking, and no, I am not a Democrat. I am a bad man, but I am honest – even when I under-estimate, because it is an estimate, a guess, I guess. For those that over-estimate their use tax (all 3 of those lucky citizens), it will be a tax cut. I would bet that it would be a tax hike for most, not because it is there already, but because it will ultimately mean paying more to the state. That is essentially why Tennessee estimates (guesses) that Maine is losing money. Everyone must be under-estimating, so maybe I am not so bad.
At least you are honest about being dishonest :-)
Maine Revenue provides a formula to estimate the use tax due so it is acceptable to estimate provided you follow the instructions. But estimation is only allowed if you don’t know how much you owe.
Still not a tax hike though, a tax hike is an increase in the amount required to be paid; this is not a new tax, it will be an enforcement tool for compliance with an existing tax rule.
Is the state going to send auditors out to Apple and confirm iTune downloads?
What about Amazon? How is the state going to audit online sales through Amazon?
Will the state have the authority to audit my household for online goods I’ve purchased, or my online accounts at Apple or Amazon?
What penalty and fine can the state levy against Apple if they refuse to comply?
Will my belongings be confiscated if I am unable to pay the implied tax?
People call ME paranoid and alarmist but this takes the cake!
Thanks. I at least hope the sales tax rate is lowered from 5%. The basic fact is the local merchant or dealership is getting trounced by online sales.
When we all pay MSRP plus 5% that is a rather heavy cost up front for buying goods and services in Maine.
The tax burden is so high now when coupled with all other costs, a majority of Maine companies have no other choice than to charge MSRP. All the “studies” reported about how much tax is lost use the same assumption of a sales cost, and that is MSRP.
The labor rate is now at $70/hr. for most repair/installation work, or nearly double from only a few years ago.
Job creation Acts
or,
The Marketplace Fairness Act
all in the cause of a level playing field….
There was a time ,so very long ago, when a Tax had some thing to do with a need directly linked to what was being taxed. Conman sense and equity played a big part in these situations, those days are long gone. Now we live in a time where every one is owed, every want is a right and every excuse that can possibly be used for a Tax is dreamed up. This is another of those situations where it is a matter of what they can get away with, not weather the tax is fair,or needed.
Do you think that current policy of requiring Mainers to pay tax on out-of-state purchases falls under your classification of “what they can get away with”?
Of course. Maine has no business , none, in those types of transactions.
I have supported almost everything Lepage has done until now. If he and Mrs Sussman want to help businesses and working people in this state then why not just eliminate the sales tax totally !
This is just another Republican stand by – raising the sales tax (which this will effectively do) just hits the poor and middle class the hardest. For somebody who spends all of his time railing about not raising taxes, Penguin sure seems eager to do it.
Memo to Governor Lepage:
Newspapers are currently profiting without a sales tax. This is unfair. Businesses which advocate taxes should be taxed in the manner they suggest for others.
That would be a .05 tax on every paper.
ARE newspapers profiting?
Wow. This is basically the exact same editorial as was in the Press Herald. And this isn’t the first time. There is essentially one daily newspaper in Maine now.
I LOVE this picture of LePage! It reminds me of the Calvin and Hobbes cartoon when Calvin is pretending to be a blustering dictator!
My favorite as well ….. it’s this the speech where he’s asking someone to pull his finger?
That definitely sounds like something that Calvin would say in a speech as a Governor.
If I didn’t buy whatever in this state and whatever wasn’t made in this state why am I paying taxes on whatever to the state of Maine? With this reasoning I should also be paying state taxes to all the other states that I didn’t buy whatever I bought in. Another good reason to shop in New Hampshire……
Oy. And you’ll owe tax on THOSE purchases, too, anyway!
Yeah… good luck state of Maine trying to enforce and collect THAT….I pay enough freaking taxes to this dipstick state. If I can buy something expensive in NH and save on the taxes I’m buying with cash in NH…….consider it like the Cayman Islands bank accounts that some of us have……
People are dreaming if they think that making Internet sales more expensive will drive people to shop on Main St. This is nothing to do with helping businesses, but about filling the coffers with more tax $$ to be spent on our transients and welfare.
The internet is the last frontier, once government gets their hands into it, they will bleed us dry there as well.
Online purchasing is a reality that will not slow down. Local business need to be part of it, then they wouldn’t be all for taxing it.
Rep. Chellie Pingree: I’m shocked! The gov, well, I expected something like that from him.
Don’t we already pay a use taxon our income tax forms for purchasing items out of state?
Some of us already do, yes.
Some of us always have to. Those that sell online to out of state customers, never pay any sales tax.
Sellers of goods do not pay sales tax, they collect it and remit it to the State. Buyers of goods are responsible for sales tax.
Depends. At issue is how to have Amazon.com collect and pay Maine State Sales Tax, or other online entities with gross revenues in excess of $500k. remit sales taxes.
The most realistic and quickest way is to have the credit card companies remit the sales tax to the state and not the vendor.
Maine’s tax is only 5% and we owe the difference if we pay any amount in sales tax less than 5%.
With a credit card company managing the sales tax remittance, then it doesn’t matter if the sale is online, or in person. In state or out of state.
Only that the going rate for such transactions is generally, 5% per leg of the transaction. One should expect the same demand from Amazon.com to collect and remit sales tax although, I think their commission fees would also come into play. PayPal however, is a definite player in all this and will step up to the plate to collect and remit state sales tax fees when after such terms are negotiated.
Once it is that far along then we can skim other states sales tax on Maine sales. So that as shown where as Maine citizens we are servitude to state tax, the State then only needs to front run on other state’s taxes by charging a 1% tax against say a sale made to someone from Vermont, Florida, California, or, New York…
The last thing I want is a bank to be in involved in collecting sales tax. I not only don’t trust them, I don’t like the fees associated with every single purchase made on them. They banks have trained Americans to use plastic debit and credit cards so now they can collect a small percentage of every single sale made on them where before, when cash was king, there was no way to do that.
Getting the banks to process sales tax sounds like another step to a cashless society in which every single transaction is recorded and stored by the government. I will not use plastic unless I absolutely must, such as for eBay or some other online store. I will pay cash or I’ll use a check if I have no cash on hand. And I will do what I can to make sure that cash is always an option.
PayPal, another piece of work. eBay owns PayPal and have made a policy on their auction site stating that sellers CANNOT list checks as an optional form of payment. A buyer can ask to pay with check and the seller can accept, but the seller cannot mention it first. That ensures that eBay/PayPal gets paid twice on a purchase made between the buyer and seller. I don’t like that policy and I don’t like eBay’s micromanaging of their sellers. Giving PayPal even MORE power, especially as an agent for the government, is scary.
Cash all the way!!!
Someone might want to clue Lepage in on a little secret. The Maine Income Tax and youre local excise tax, were surpose to be temp if you look back when they were implemented. They were never discontinued as you can see. I would be interested to see what the wording on those taxes actually was. The state has tried every loop hole to get more money thru fees from the sportsman and everyone in the state to cover misgivings on the budget.
This one I disagree with LePage on. This is going to hurt far more then the money collected would help. LePage needs to stick to CUTTING programs and spending.
I just don’t understand where the legality is. If I buy something over the internet from a company in California, the transaction takes place in California. It would seem that it would be the same as if I traveled to California and bought the item. Are we paying extra sales tax for the privilege of living in Maine? Does that mean that if I had property in Florida in my wife’s name, I would have to pay sales tax in Florida for items I bought in Maine while I was acting as Governor?
“With no law in place to collect sales taxes, companies will continue to be incentivized to avoid their responsibility.”
ahhhh, more like incentivized to protect their private property by retaining possession of it, kind of like what everyone does on their income tax when they claim the mortage interest deduction.