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Council formed to demand enforcement of tax on internet sales

Job makers from Flint and Owosso joined small business owners from across the state Feb. 8 and announced the formation of the new Michigan Main Street Leadership Council, a steering committee that will lobby lawmakers in Lansing to close the internet sales tax loophole, level the playing field for local businesses on "main street" and protect Michigan jobs.

The state House of Representatives is considering bipartisan House Bill 5004 and House Bill 5005 that would close the loophole and recognize that "a sale is a sale is a sale."

"At my store I'm fighting every day to make the sale," said Kim Volz, owner of the Dive Shop in Flint.

"I recently lost an $800 sale after spending hours with a customer on the showroom floor answering questions and demonstrating the equipment because the shopper was able to purchase the item from an online retailer that did not collect Michigan's sales tax. This is a fairness issue."

The Main Street Leadership Council is made up of small business owners and job makers from across the state. In addition to Volz, Carla Merrill of Norm Henry Shoes in Owosso was named to the council.

When consumers buy a product online, Michigan law says the consumer must pay the same sales tax he or she would if buying the product from a store in person. Under Michigan's current sales tax collection system, out-of-state, online-only retailers are exploiting the massive legal loophole, allowing them to forgo collecting sales tax at the point of sale. Online-only retailers use this loophole to attract shoppers away from brick-and-mortar businesses by using deceptively lower prices since Michigan retailers must add — and collect — the six percent sales tax to the customer's bill. As a result, local businesses are put at a significant competitive disadvantage that puts Michigan's business community at risk.

Last fall, Reps. Eileen Kowall (R-White Lake) and Jim Ananich (D-Flint) introduced the Michigan Main Street Fairness Act, a bipartisan legislative package that protects job makers across the state by closing the sales tax loophole putting Michigan businesses at risk.

To close the sales tax loophole the Michigan Main Street Fairness Act:

  • Moves online-only retailers under the same sales tax collection laws under which Michigan brick-and-mortar businesses operate.
  • Expands the definition of "nexus" or "physical presence" to include retailers who conduct business through affiliate businesses in Michigan or own subsidiary companies in an attempt to avoid paying sales tax.

"Job makers are standing together across Michigan asking lawmakers to do the right thing and level the playing field for small businesses," said James P. Hallan, president and CEO of the Michigan Retailers Association, that represents 12,000 individual storefronts. "Because of the internet sales tax loophole, out-of-state online-only mega retailers like Amazon are able to sell products at a six percent discount, making it harder for local job makers to succeed. The Michigan Main Street Leadership Council believes the state's tax code should be fair and no longer threaten Michigan jobs."

According to a report by Lansing-based Public Sector Consultants, the sales tax loophole has a significant negative impact on job makers and the state's economy. The study found that closing the loophole would directly lead to the creation of as many as 1,600 new jobs, would increase investment in Michigan's economy in the form of sales at brick-and-mortar retail outlets by as much as $126 million per year and would save the state as much as $141.5 million in otherwise lost sales tax revenue from electronic remote sales in 2012 alone.

The Michigan Main Street Leadership Council will provide an organized voice in Lansing for retailers from across Michigan who last year formed the Michigan Alliance for Main Street Fairness, a coalition of hundreds of job makers calling for common-sense updates to Michigan's tax system to ensure there is a level playing field for both small businesses and online-only retailers concerning the collection of sales taxes. Visit www.standwithmainstreet.com/michigan for more information about the coalition.

(Note: This report is provided as a service to our readers and a service to the group or individual mentioned in the release. Usually, only minor editing is done. The group or individual is responsible for all information provided.)

 

 

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