Missouri is almost alone among states with sales taxes in that it hasn’t extended them to online purchases, even though the U.S. Supreme Court greenlighted such collections more than a year ago. State and local governments in Missouri are missing out on up to $280 million annually in needed dollars while putting local brick-and-mortar businesses at an unfair disadvantage with out-of-state online competitors. How is that fair?
The problem is a few conservative legislators who — putting ideological dogma ahead of sound fiscal policy, fairness and common sense — say leveling this inequity would constitute a new tax. No, it’s merely the consistent application of current taxes, and it’s beyond time to do it.
The internet has fundamentally changed the way Americans shop. In two decades, online sales have gone from a tiny niche segment of the economy to more than 10% of all retail sales. That number is deceptively low because broad areas of purchasing seldom happen online, like automobiles and restaurant meals. In subcategories like general merchandise, electronics and books, online sales already challenge or dominate those of traditional stores.
Online sales are growing at a far faster pace than traditional sales, while even once-invincible, brick-and-mortar giants are struggling to survive. There’s no longer a serious argument to be made that online purchasing is a short-lived fad. It is unquestionably the future of retail commerce and must be taxed fairly so it doesn’t put traditional businesses at a competitive disadvantage.
For years, online retailers benefited from the fact that their new dynamic, reaching across state lines with no physical address in most states, let them go untouched by state and local sales taxes even as their brick-and-mortar competitors had to pay them. The Supreme Court last year cleared the way for states to collect sales taxes from online sales to residents in their states, regardless of where the companies are based.
Of the 45 states that have sales taxes, all but Missouri and Florida have adjusted their laws to mandate online collections. Efforts to do that in Missouri have been stymied — despite support from Republican Gov. Mike Parson — by conservatives who irrationally argued that since online sales aren’t currently taxed here, doing so would mean adding taxes.
Let’s say a new store is opening down the street. Does it make sense to argue that, because it wasn’t taxed before (because it didn’t exist), making it pay taxes like other retailers represents a new tax? This is the flawed rationale of anti-tax extremists. Not only does it starve public coffers, the two-tier tax system makes it impossible for physical stores to compete.
When the Legislature reconvenes in January, Parson and other serious Republicans should remember what “pro-business” means. Physical stores that invest on the ground in Missouri deserve treatment equal to, if not better than, what Amazon gets.