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The Daily Wildcat

The Daily Wildcat

 

    Online shopping tax discourages competition

    The Arizona Retailers’ Association will soon begin a statewide campaign for Arizona to instate a sales tax on items that Arizonans buy online. Arizona Gov. Jan Brewer created the Transaction Privilege Tax Simplification Task Force and members are set to meet July 23 to discuss the potential tax.

    Retail stores claim a tax would be a move toward equality, but the truth is, it hinders progress and competition for all businesses.
    Owners of retail businesses have complained since the Internet encroached on their territory that they aren’t getting a fair shake. They claim that the lack of taxes on Internet sales gives them a competitive disadvantage and that they have no recourse other than a change in government policy.

    Retailers who want to push an Internet sales tax would instead be better off using their time to brainstorm options on how to compete with online retailers. These options could include moving their business online, streamlining their business model or simply lowering prices. In the past, Senate Bill 1338, required a tax for online retailers, failed to pass three times, according to the Arizona Capitol Times.

    There are also signs that an Internet sales tax will only hurt Arizona’s economy. Arkansas passed a law in 2011 requiring companies that did business with in-state marketing affiliates to tax purchases shipped to the state. In response, the country’s largest online retailer, Amazon.com, simply terminated relations with all Arkansas affiliates. The same thing has happened in Connecticut, Illinois, North Carolina and several other states. Larger states like California have managed to strike a deal with Amazon and avoid the tax until September or if the federal government decides against the mandate. Arizona is not likely to be so lucky.

    Consumers have a right to the lowest price they can find. The principle behind a free market is that the best businessman, with the best business model and the best goods, wins. Nowhere does it say in a business class or economics textbook that if you are being beat, simply try to put the other guy out of business. That’s not competition, it’s cheating.

    It isn’t as though online retailers have all the disadvantages in this game. For one, they have to deal with shipping costs, which isn’t a problem for physical stores. For some people, this tax doesn’t even change the way they shop, and a tax on top of online shipping would not dissuade online shoppers from purchasing.

    Amazon has come up with a creative solution to the shipping problem. They offer Amazon Prime, which includes “free” 2-day shipping with a yearly lump-sum of $80. Amazon Prime is an example of a business looking at the problem presented to it, and figuring out a way around it. Amazon didn’t go to the government and request that they add a $5 surcharge on all goods purchased in stores to account for the lack of shipping — they solved their own problem. Amazon is currently collecting sales tax in six states: Kansas, Kentucky, New York, North Dakota, Texas and Washington.

    The Arizona Retailers’ Association would do well to follow Amazon’s example.

    “We’re not putting all our eggs in one basket yet,” said Michelle Almer, executive director of the Arizona Retailers’ Association, in a released statement, “because we don’t know what the task force is going to do.”

    —Tyler Johnson is a journalism senior. He can be reached at letters@wildcat.arizona.edu or on Twitter via @WildcatOpinions .

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