A Main Street business owner told me, “If there is one thing you could do to help it would be to make sure internet businesses have to pay the same sales tax as us. It’s not fair that they can sell their goods cheaper and not pay tax. It hurts my business”
Have you ever bought something on the internet and wondered why you didn’t pay sales tax?
If the internet business you bought from is not Wisconsin-based, it likely did not collect sales tax. When this happens, the out-of-state business actually has an advantage over the Wisconsin business. This hurts the sales of our state businesses and makes it more difficult for stores on our Main Streets to compete.
The results are not fair. As one merchant put it, “There is nothing fair about a tax policy that hurts Wisconsin’s Main Street retailers while helping out-of-state sellers.”
The past week, as a member of the Senate Committee on Tax Fairness and Family Prosperity, I joined my colleagues in voting for a proposal to improve the fairness of sales taxes. The proposal, called the “Main Street Equity Act” helps level the paying field for local businesses. It creates a fairer, simpler and standard way to collect sales tax. The plan is also sometimes called Streamlined Sales Tax.
Quite a bit of money comes to the state through sales tax. About a third of all money the state collects comes from sales tax. The money is used to pay for state services like roads and safety. These services are used by the companies that deliver their products to our doors when we buy goods off the internet.
The answer to helping our Main Street businesses goes far beyond Wisconsin’s borders and takes us back in time nearly a decade. Long before I came to the Senate, a few pioneers, including Senator Bob Jauch (D – Poplar), began working with other states to streamline the definition of and the way sales tax is collected.
Wisconsin’s own Diane Hardt, who works for the Department of Revenue, served eight years as Chair of the national committee that set the standards for streamlined sales tax. At the Senate hearing, she shared one reason why the bill is important: writing the same rules across different states helps our home-grown businesses.
Think about our own Wisconsin-based Kwik Trip that also does business in Iowa and Minnesota. Knowing that Wisconsin defines candy, prepared foods and soft drinks the same as our neighboring states helps make collecting sales tax easier.
The Streamlined Sales Tax proposal makes it easier for businesses to calculate and pay the state sales tax. Over 1,000 businesses have volunteered to provide sales tax to our state – if we would pass the proposal.
Our Department of Revenue calculates that Wisconsin may be losing $156 million by not putting the streamlined sales tax plan in place. This is in a time when the state faces an estimated $650 million shortfall and every state leader is looking for ways to avoid painful cuts in services.
Across our county, 22 states have adopted the streamlined sales tax plan. States as diverse as Arkansas and Wyoming led the way in making it easier for business and fairer for Main Street to collect sales tax. But it was Wisconsin that led in the development of the plan, which was completed in 2002.
The irony of the situation hit me during the hearing – Wisconsin led the nation in putting the proposal together but still has not adopted it. Businesses have volunteered to provide the sales tax money to our state if only we adopted the plan but we, as a state, can’t collect that tax money because we don’t have the streamlined sales tax plan in place.
The state is facing financial hard times and many local businesses are struggling to survive. It makes sense to do what we can to level the playing field for our local businesses. The payments made by those out-of-state sales will help the state by bringing in new money - keeping taxes lower for the rest of us.
Have ideas on how to make our tax system fairer? Let me know! Contact me in Black River Falls at (715) 284-1730; or in Madison at (877) 763-6636 (toll free); or write: State Capitol; P.O. Box 7882 Madison, WI 53707-7882 or email Sen.Vinehout@legis.wisconsin.gov .