A week ago, several metro communities placed on their ballots proposals to institute a “use tax” on their residents. In essence, the tax would have allowed local municipalities to collect sales tax on online purchases made from out-of-state vendors while adding no sales tax to local retailers. Unfortunately, these proposals were all defeated, except in my hometown of Liberty.
Sure, I get it. Everyone likes to pay as little tax as possible; feeling that way that doesn’t mean you’re a bad person. It just means, in my opinion, you’re rather short-sighted. In Independence alone, the city loses an estimated $1.5 million in revenue through online purchases. (See 1 www.kshb.com/news/local-news/use-tax-would-charge-local-tax-for-out-of-state-sales-in-independence) That means tax revenue used to improve infrastructure and the quality of life for its residents isn’t created. On top of that, the unfair playing field that is created for local retailers results in fewer jobs and lower economic growth for all who live here.
Before you accuse me of being a tax-and-spend liberal, let me just say, I am a fiscal conservative who supports smaller government and lower taxes across the board. But in this case, it is actually my unwavering belief in the free market that leads me to support these use tax proposals.
Think about it. At the root of capitalism is the idea that fair competition between businesses produce higher quality products and services at lower prices. Giving certain retailers waivers on the taxes does the opposite of that. Instead, it helps pick winners and losers based on nothing more than government policies.
That’s why for me, this wasn’t a vote for higher taxes. It was a vote for fairness. And to those who voted against the tax, I have one question for you. Why do think a mom and pop store located less than a mile from your house should be forced to charge sales tax while a large superstore, located just outside of the state’s borders, should not?
Arguments have been made by companies like Amazon that collecting different rates in different localities is simply too burdensome to online retailers and as a result, requiring them to collect sales tax would be virtually impossible. Several years ago, that argument might have held water. But today, technological advances have made it both simple and affordable for online retailers of all sizes to be able to be in compliance with local tax rates.
Others have argued that the internet is the greatest technological advancement in centuries and nothing should be done to slow its ability to grow and develop. Once again, a decade ago I might have agreed. But today, e-commerce is thriving. It no longer needs or deserves special protection from taxation. In fact, it is brick-and-mortar locations that are suffering.
As more and more states and municipalities continue to suffer to reach revenue goals, I have no doubt the “use tax” will once again come before the voting public. I would encourage you next time to really consider the impact voting no on such ballot issues will have, not only to ourselves, but also to the communities that we love.
(Past performance is no guarantee of future results. Advice is intended to be general in nature.)
Luke Davis is the director of operations and compliance at Stewardship Capital in Independence.