The two e-commerce giants, Amazon.com (
AMZN) and eBay Inc. (
EBAY) are having quite an opposite view on the question of sales tax collection by the small retailers that is being pushed by the Congress.
While Amazon is in favor of the States collecting sales taxes for purchases made through online for a level playing field, eBay believes that small sellers don't have any advantage in a market place where bigwigs like Wal-Mart, Target, Best Buy and host of others are having huge presence of physical as well as online stores. Amazon and eBay too have wide network of distribution centers around the globe.
Bill to tax Online Stores
Amazon's vice president for global public policy Paul Misener supports the bipartisan tax bill to build a federal online sale tax. U.S. senate Lamar Alexander, Dick Durbin and Michael Enzi, introduced the bill named Marketplace Fairness Act in early November. The act also exempts small retailers with annual sales of lower than $500,000 from the proposed taxes on sales through online.
The current law does not have any provisions that would allow the States to collect sales tax on transactions taking place in States where the retailers don't have any physical presence. This has made trade conventional retailers to raise their voice against Internet-based companies for the unfair advantage they have.
In order to plug the loopholes, a legislation is proposed to permit the States to collect sales tax for the purchases that their residents make through online. The proposed bill also allowed some relief to small sellers through a restriction of annual sales.
Reaction
But Amazon thinks that by allowing exemption to small retailers State will loss significant revenues. According to Misener, about 30% of tax goes uncollected from the small retailers having business of less than $150,000. He added, "Any higher threshold would deny the States even more revenue and keep the playing field even more un-level."
But their rival eBay thinks differently and sympathetic towards small sellers. The company's vice president and deputy general counsel Tod Cohen reportedly said that indeed the small retailers are active and adopting new technology, but that does not mean that they are winning the race in the current market place.
The e-commerce giant also believes that small sellers are already losing their market share in the current scenario. Moreover, consumers would also shift if they were imposed additional tax by small remote sellers, who don't enjoy any benefits attached to their presence.
IStock Punch
The level playing field sought by Amazon is quite understandable and the concern raised by eBay also stands good. At a time when the job market and economy are going through difficult phase, allowing small retail sellers some relief abodes well. Otherwise, they will face serious problems in running the business.