Meadville Tribune

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CNHI News Service Originals

October 24, 2011

E-commerce raises question of sales tax fairness

(Continued)

NORMAL, Ill. —

E-commerce merchants also like to point out that online sales aren't exempt from the sales tax; that the burden to pay it falls on consumers through the use tax requirement.

That argument doesn't carry weight with Durbin. At his press conference in Normal, the Senate Majority Whip admitted he'd failed to pay his use taxes until last year, when his accountant advised him to do so.

Durbin's confession drew a laugh, but it illustrates his point: Taxpayer compliance in every state is woefully low – less than 5 percent in Illinois – which only heightens the need for online retailers to take on the role of tax collector.

“This is a mature, growing industry that needs to accept its social responsibility,” Durbin said.

In Normal, the issue is playing out on several fronts. The mayor worries about dwindling tax revenues, and the sustainability of his running-shoes store that’s losing customers to online retailers.

His shop, across the street from Smith's store, is located in an aging retail district being revitalized with a $200 million infusion of private and public funds. The district's success -- and the town's ability to pay back some of that money -- depends on keeping merchants who can lure paying customers into their stores.

One of those merchants is bookseller Brian Simpson, who stocks used and collectible books. Customers still wander his store aisles but more than half his sales are made online, many through “third-party seller” agreements with online retailers, including Amazon. “My online customers help me keep my storefront open,” said Simpson.

That means Kristen Gianaris, a 20-year-old college student, can still browse for books in Simpson's store. She discovered it after the Borders bookstore chain shuttered its storefronts. “My mom used to bring me to bookstores when I was a kid,” Gianaris said. “I just like the feel of them.”

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