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On Monday, the Senate passed a bill that seeks to impose an internet sales tax. eBay CEO John Donahoe believes such a sales tax is bad for SMBs
The Internet community is up in cahoots this week after the Senate passed a bill that seeks to impose a sales tax on eCommerce sites.
Should SMBs be forced to pay sales tax? eBay CEO John Donahoe believes such a sales tax is bad for SMBs (small to medium sized businesses).
Online Sales Tax
For years, eBay has worked to streamline eCommerce for retailers and shoppers alike. If passed, the new bill is expected to generate $12 million a year and level the playing field for large retailers like Best Buy and Wal-Mart. Donahoe argues that the big companies don’t have anything to worry about; it’s the companies who generate less than $10 million a year in revenue who will slowly be squeezed out of business. Unfortunately, eBay stands alone as one of the only eCommerce sites against the online sales tax. So where does that leave us?
Marketplace Fairness Act
Supporters argue the Marketplace Fairness Act, which grants states the authority to collect sales tax, will protect SMBs by offering special tax exemptions and services. The act originally came into existence when collecting tax across state lines became to complicated; fast forward more than 40 years and the problem is all the same. For years, no one has figured out how to successful impose an internet sales tax as every state has different percentage rates.
The Losing End
If Amazon were still on eBay’s side, such a bill would be less-likely to pass legislation. Perhaps, perhaps not. As it stands, online merchants only have to pay sales tax in states where they have a physical presence; Amazon has warehouses in nearly a dozen states, so it has been paying sales tax anyway. For Donahoe, it’s not about the competition, it’s about the mom and pop shops online who don’t make enough money to warrant paying additional sales tax in the first place. But the Senate doesn’t seem to care and only responds by saying software will be provided to each merchant. Looks like the days of a free and easy internet community are numbered. Online shoppers, the jig is up.
