A new study commissioned by brick-and-mortar retailers claims Tennessee could lose as much as $3 billion in tax revenue and more than 10,000 jobs over the next five years because the state cannot force online retailers to collect sales taxes from its customers.
The report released Monday by the retailers’ coalition — the Alliance for Main Street Fairness — employed a multiplier effect to arrive at those numbers, which were many times greater than any previous studies have found.
According to the coalition, the loss of online sales taxes would “also trigger losses of other types of state tax revenues as spending on taxable items such as gasoline, alcohol, tobacco and amusements decline.
“Revenues from taxes and fees on businesses would also decline as businesses downsize due to reduced consumer spending,” the report reads.
But the report’s author, Sharon Younger of Younger Associates, acknowledged her study didn’t take into account the economic effect of consumers losing buying power because they would be paying the state sales tax on all online purchases.
The coalition — an alliance of major retailers like Wal-Mart and independent store owners — is trying to pressure Amazon.com to start collecting state sales taxes from all its customers. That has been controversial in Tennessee since Amazon began opening distribution centers here this year after cutting a deal with the state that exempted the online retail giant from paying the tax.
“Perhaps worst of all, the sales tax loophole gives Amazon a huge advantage over existing merchants who do collect and pay taxes,” said Mike Cohen, spokesman for the Alliance for Main Street Fairness. “The Younger study is further proof that the Amazon deal is bad for existing Tennessee merchants, and our local and state governments. It may be good for Amazon, but it’s bad for everyone else.”
Amazon agreed to collect California taxes in one year in a deal with legislative leaders there this month. Cohen called on Gov. Bill Haslam to force Amazon to do the same in Tennessee.
“While we are glad to hear that Amazon has agreed to collect sales taxes just like every other business in California, we need action now in Tennessee, “ he said. “We hope Gov. Haslam can get Amazon to do in Tennessee what they now have conceded they are willing to do in California, which is play by the same rules as everyone else.”
The coalition held a news conference at Cumberland Transit, a bicycle and outdoor recreation shop on West End Avenue.
“We’re all about supporting the Main Street folks for just leveling the playing field,” said the store’s owner, Allen Doty. “I’m sure everybody listening has witnessed just about every locally owned bookstore in this town closing their doors because of folks like Amazon and other online folks not having to charge sales tax for items bought online. The few jobs Amazon might create by moving into the state of Tennessee — I don’t think that even compares to the number of losses from Davis-Kidd, Borders and every other bookstore that we all know about.”