WASHINGTON – Lawmakers and local businessmen use similar terms when describing the Marketplace Fairness Act: “leveling the playing field,” “brick-and-mortar businesses” and “Main Street.”
Except it’s Main Avenue in Durango.
The U.S. Senate passed the Marketplace Fairness Act by a 69-27 vote last week. The bill generally would subject online shopping to state sales taxes. The taxes would be sent to the state where the purchaser lives.
Current law says states can force retailers to collect sales taxes only if the company has a physical presence in the state.
That can give online companies a leg up over brick-and-mortar stores that must collect taxes on all transactions. But the measure’s opponents, including eBay, say the fairness act would burden small online businesses that are not easily able to collect and remit sales taxes.
Businesses with less than $1 million in online sales would be exempted under the legislation.
Sens. Michael Bennet and Mark Udall, D-Colo., voted in favor of the Senate bill.
“Online marketplaces have created great companies and innovative ways of doing business,” Udall said in a speech on the Senate floor on April 22. “But federal law has failed to keep up with the pace of online sales.”
Bennet believes the bill gives physical businesses, like the ones on Durango’s Main Avenue, a better shot at competing with online retailers, said his spokesman Adam Bozzi.
“The Marketplace Fairness Act levels the playing field for Colorado in businesses that are in brick-and-mortar stores,” he said.
President Barack Obama has indicated that he supports the bill, but it has yet to be taken up in the House.
If it gets to the House, U.S. Rep. Scott Tipton, R-Cortez, will oppose it, said his spokesman Josh Green.
“Do we really need to be raising taxes?” Green said. “It’s going to impact local businesses.”
Tipton is a former small-businessman and a creator of the bipartisan Congressional Small Business Caucus in the 113th Congress.
Tipton co-founded Mesa Verde Indian Pottery in Cortez with his brother, Joe, after graduating from college more than 30 years ago. Tipton no longer is involved in the day-to-day decisions of the business.
The Colorado Municipal League supports the legislation, Executive Director Sam Mamet said.
“This has been an issue that’s been around a long time,” he said.
In Durango, with its community of local businesses downtown, the measure would aid small retailers competing with online vendors, said Jack Llewellyn, executive director of the Durango Chamber of Commerce.
“For local merchants, it’s going to help,” he said.
Llewellyn said he tries to adopt a “think-before-you-click attitude,” reminding others to ask, “Can I get it here locally?”
Many Durango business owners have followed the Marketplace Fairness Act’s trajectory closely.
“I was supportive of the legislation because it evens the playing field,” said Brown’s Shoe Fit Co. owner Steve Swisher, saying he has to charge customers 7.9 percent in taxes. “The loss of sales-tax revenue is a loss to the local community.”
Swisher said Internet businesses that don’t charge taxes have an unfair advantage over stores like his.
“I feel that my store can compete with anybody head-to-head,” he said.
Andrea Avantaggio, co-owner of Maria’s Bookshop, said she knows a lot of book shopping occurs online, but Durangoans nevertheless support her business.
“I think that people really go out of their way to keep us here,” she said.
Avantaggio said the store has written to many lawmakers through the years, urging that they pass legislation like this.
Brick-and-mortar stores don’t tell the government it’s too hard for them to collect and remit sales taxes, she said.
“If you’re selling the same product, they have an advantage over you,” she said.
Durango Coffee Co. has a physical location as well as a presence online, said retail store owner Tim Wheeler.
The online side of his business – which Wheeler called “modest” – would fall under the $1-million-or-less exemption under the bill’s current language.
“We probably will never achieve that,” he said of the $1 million mark. Wheeler said his Internet sales are more about customer satisfaction – often, tourists visit Durango and want more of the local coffee when they return home.
“Most retailers are not wealthy people,” he said. “We already contribute a tremendous amount” to the local economy.
In Denver, state legislators moved quickly to prepare for the Marketplace Fairness Act. In the closing days of their annual session, they passed a pair of bills to comply with the act’s requirements.
The first one designates the state as the lone tax collector for online merchants. The second calls for a study of creating a common sales-tax base among the state and all its local governments.
Stefanie Dazio is a student at American University in Washington, D.C., and an intern for The Durango Herald. You can reach her at email@example.com. Staff writer Joe Hanel contributed to this report from Denver.