It’s time for parity in sales taxes

Published 10:14 pm Tuesday, January 31, 2017

By Nancy C. Thomas & Raymond J. Mattes Jr.

Holiday retail sales are increasing. Consumer confidence is climbing. Yet all is not nirvana in the rocky world of the retail economy.

According to Forbes, Cyber Monday 2016 was the biggest day in the history of U.S. e-commerce. Sales surpassed initial expectations by hitting a record $3.9 billion that day.

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Such extraordinary growth came at the expense of local stores. ShopperTrak noted that consumer visits to brick-and-mortar locations fell 1 percent on Thanksgiving weekend and Black Friday, showing that consumers are allocating more of their budgets toward the web.

The National Retail Federation’s consumer survey indicated that 3 million fewer people visited local stores on Black Friday weekend, while 5.5 million more placed holiday orders online.

As record-breaking online sales continued through New Year’s, stalwarts of the brick-and-mortar retail industry — Macy’s, Kohl’s and J.C. Penney — reported significant sales declines.

Macy’s is scheduled to close 68 stores and slash 10,000 jobs due to poor earnings forecasts. The closings include stores that have survived for decades in Virginia, such as the landmark Macy’s in Alexandria, which opened its doors in 1965 and employs 119 local folks; and Lynchburg’s River Ridge Macy’s, which has survived for 47 years and has 80 employees.

These closings follow on the heels of last year’s closings of Macy’s at Military Circle in Norfolk, Chesapeake Square in Chesapeake and Peninsula Town Center in Hampton, resulting in 273 lay-offs; along with three other Virginia stores, totaling 216 job losses.

While Amazon touts an additional 100,000 jobs in the national job market, employment at America’s department stores has plunged by 250,000 jobs since 2012.

What does this dismal outlook for brick-and-mortar stores mean to localities and state governments that count on sales and use taxes, BPOL taxes and payroll taxes? It means services that citizens depend on may eventually have to be delayed or cut unless city officials can scramble budgets to fill the gaps.

During the 2016, Gov. Terry McAuliffe proposed that Virginia begin collecting its fair share of online tax. In his budget address to the Virginia General Assembly, he projected that this proposal would generate new state and local revenue of $21 million.

The legislation would require out-of-state merchants using warehouses or fulfillment centers located in Virginia to register as dealers for the collection of sales tax on their sales into Virginia.

Sen. Emmett Hanger from Staunton, Republican co-chair of the Senate Finance Committee, has submitted SB 962; and Delegate Vivian Watts from Northern Virginia has filed HB 2058. Both bills mirror the governor’s proposal and offer online sales tax as one of the few bipartisan efforts at the General Assembly.

In 2012, Sen. Frank Wagner from Virginia Beach and Sen. Hanger were co-patrons of the landmark legislation, advocated by the Virginia Retail Federation and others, to require Amazon to collect sales and use tax in Virginia.

All three legislators have proven to be tireless champions in the fight for e-fairness at the state level.

This advocacy for e-fairness is eminently conservative. It seeks to remove government interference in the marketplace, where currently many online-only retailers enjoy what is in effect a government price advantage.

By exploiting an outdated legal loophole, online-only retailers have for decades avoided collecting sales tax. This sales tax loophole grows more threatening with each holiday season. Local retail entrepreneurs and their big-box neighbors face a crisis that threatens to snuff out their businesses.

Struggling Virginia retailers need the Virginia General Assembly to take action. From Hampton Roads to Richmond, Northern Virginia to the Shenandoah Valley, the Blue Ridge to Southside, local merchants are fighting valiantly for their businesses and communities.

We call on Virginia’s legislators to support Sen. Hanger, Delegate Watts and Gov. McAuliffe in their efforts to bring fair retail competition to the Virginia marketplace; strengthen Virginia’s budget; and ensure survival of retail stores that support localities’ jobs and economic prosperity.

Nancy C. Thomas and Raymond J. Mattes Jr. are co-presidents and chief executive officers of the Virginia Retail Federation in Richmond. Email Thomas at Email Mattes at