‘Close online sales tax loophole’Published 10:13pm Wednesday, April 11, 2012
LANSING — The Michigan Association of Recreation Vehicles and Campgrounds (MARVAC) joined the growing coalition businesses supporting House Bills 5004 and 5005.
With Michigan lawmakers returning soon to Lansing from spring break, many retailers renewed calls for the legislature to take action on bipartisan legislation to close the online sales tax loophole.
“Through programs like Pure Michigan, Lansing goes to great lengths to market this state’s natural beauty to campers, visitors and RV owners while at the same time our state’s own tax policy is putting local job makers and RV dealers who cater to those campers at a real disadvantage,” said Tim DeWitt, executive director of the Michigan Association of Recreation Vehicles and Campgrounds. “Michigan’s tax code should be fair to local small businesses and dealers operating in the state instead of giving a competitive advantage to out-of-state retailers.”
“Passing the Main Street Fairness Act should be the legislature’s first priority after returning from spring break because state tax laws should treat all retail transactions the same and the current system puts Michigan jobs at risk,” James P. Hallan, president and CEO of the Michigan Retailers Association, which represents 12,000 individual storefronts, said. “A sale is a sale is a sale regardless of how it takes place. It does not make any sense for the state to spend millions each year trying to drum up business for local communities and retailers like those in the Michigan Association of Recreation Vehicles and Campgrounds and then allow the tax code to penalize them for doing business in the state.”
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 exploit a 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.
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 would close the sales tax loophole.
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’ 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.
MARVAC joins the Michigan Retailers Association, Michigan Grocers Association, Michigan Agri-Business Association and other Michigan retailers who formed the Michigan Alliance for Main Street Fairness, a coalition calling for thises updates to Michigan’s tax system to ensure a level playing field for all.