February 8, 2012
Virginia Senate votes unanimously to reverse governor’s decision to let Amazon skip collecting sales tax
by Dennis Johnson
In a surprising turnaround, in Virginia, “A bill to force online retailers such as Amazon to collect the same sales taxes that mall discount stores and corner bookstores must assess from their customers won unanimous support Tuesday from the Senate Finance Committee,” reports an Associated Press wire story. The move seems a direct response to outrage that greeted Governor Bob McDonnell’s announcement, just before Christmas, that he had used over $4 million dollars of state funds to lure the company to open two new warehouses in the state, expected to employ 1,350 people — in a deal that allowed Amazon to skip paying sales taxes. (See the earlier MobyLives report.)
The new bill, sponsored by State Senator Frank Wagner, “would close a loophole that gigantic Internet merchants use to avoid collecting Virginia’s 5 percent tax” and, according to supporters, “boost Virginia’s treasury by hundreds of millions of dollars annually merely by collecting taxes already on the books.”
That would make Virginia one of six states to have such a law, along with Kentucky, Kansas, New York, North Dakota and Washington. The AP report notes that “nine others have agreements or laws about to take effect to collect online retailing taxes.”
Local retailers were ecstatic.
“They have a cybernet advantage right now — people able to shop in their pajamas and they don’t have to pay tax. It’s hard to compete with that,” Danny Givens, owner of a bookstore in Lynchburg that diversified into toy sales and a café to remain competitive against Amazon and online booksellers, said after the committee’s enthusiastic vote.
…”Everybody needs to collect and pay the government the same 5 percent. That’s all we’re asking,” said Ken Vaughan of Warrenton, a regional vice president for the Peebles department store chain, which operates 35 Virginia franchises, mostly in smaller cities. “We’re required to do that because we’re brick-and-mortar stores. The state ought not be subsidizing any stores, online or otherwise.”
Gov. McDonnell, said through a spokseperson that he ”has not yet taken a position on Wagner’s bill.”
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives