Sep 20 - State Reps Eileen Kowall and Jim Ananich to introduce the Michigan Main Street Fairness Act
Bipartisan Bills Affirm that a Sale is a Sale, Levels the Playing Field Between Small Businesses and Out-of-State Internet Retailers
LANSING, MI— State Representatives Eileen Kowall and Jim Ananich today stood with over a dozen small business owners from across Michigan and introduced the Michigan Main Street Fairness Act, a bipartisan legislative package that protects job makers across the state by closing a sales tax loophole putting Michigan businesses at risk.
“It is time for Lansing to recognize that a sale is a sale is a sale,” said Dan Marshall, owner of Marshall Music, a small business with seven locations in Michigan. “Now is the time for lawmakers to lead and pass critical legislation leveling the playing field for job makers. The alternative is just more of the same and that’s the last thing any of us can afford.”
When consumers buy a product online, Michigan law says they must pay the same sales tax they would if they were to buy 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 6-percent sales tax to the customer’s bill. As a result, Main Street businesses are put at a significant competitive disadvantage that puts Michigan’s business community at risk.
"I introduced the Main Street Fairness Act to level the playing field between local businesses and Internet retailers," said Kowall (R-White Lake Township). "Closing this loophole will eliminate the competitive disadvantage that is holding back local businesses. State government is no longer picking winners and losers. Every business in Michigan should have the same opportunity to grow and create jobs."
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; and
•
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.
“Michigan has the best workers and businesses in the world, but they won't be able to succeed unless they can compete on a level playing field,” said Ananich (D-Flint). “Democrats and Republicans should be able to agree that closing this loophole will protect Michigan jobs and help get people back to work.”
According to a report released last week 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’ 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.
“Retailers across Michigan are pleased that Representatives Kowall and Ananich recognize the simple fact that a sale is a sale is a sale,” said James P. Hallan, President and CEO of the Michigan Retailers Association which represents 12,000 individual storefronts. “Local retailers provide a tremendous number of jobs in Michigan, while extending product knowledge and customer service to shoppers across the state, but their businesses and the jobs they create are jeopardized when out-of-state, online-only retailers exploit massive legal loopholes that allow them to forgo collecting sales tax at the point of sale despite the fact that the tax is still due. This legislation is a tremendous step towards leveling the playing field and protecting jobs in Michigan.”
Retailers from across Michigan recently 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. More information about the coalition can be found at www.standwithmainstreet.com/michigan.
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