Internet Sales Tax: The Pros and Cons for E-commerce
We’ve already talked a bit about the Marketplace Fairness Act and how, if it passes into law, sales taxes will be levied on some online purchases. No matter where you stand on the Act, you need to know and understand that there are both pros and cons to the proposed bill. For online businesses, retailers, and customers, there might be a lot of changes that come from the proposed bill. However, until it is actually passed in the Senate, there is no real way to know what changes will happen. There are, however, some clear pros and cons of the Act at this point.
Whether you are for the Marketplace Fairness Act or if you are against it, knowing what to expect is important, and knowing how it may help or hurt the market is also important. As a customer or as a business, preparing is an important part of the e-commerce process. From buying to selling online, there will inevitably be changes.
Here are a few of the pros and cons you can expect to see from the Marketplace Fairness Act:
States Receive More Money: One of the biggest pros of the Internet sales tax bill, if it passes through the Senate, will be that states will receive more revenue from sales tax. Even if you are against the tax, you need to understand that more revenue for a state can mean new projects, more outreach, and more funding for things that really matter.
Fluctuation in Sales: While it will remain unclear how sales are actually affected until the Act goes into effect, you can most likely expect to see some sort of fluctuation, at least for a short period. While sales may not be permanently damaged, you may experience a short drop in online sales. However, it is important to keep in mind that many online retailers already charge a sales tax, so even if you have to start, it will be good to know that other companies have survived while charging the tax.
Equalizing the Marketplace: The central idea behind the Marketplace Fairness Act is to make the online marketplace fairer to all retailers. Because some already have to charge sales tax, those that do not charge sales tax have an advantage over those that do charge sales tax. However, if the Marketplace Fairness Act passes, then most online retailers will have to charge sales tax, thus leveling the field.
Spending More Money: Unfortunately, if the Internet sales tax passes, customers will most likely have to spend a little more money when purchasing products and services online. While this may be a con, it helps to know that a lot of money spent on online sales taxes will be put to good use.
The Marketplace Fairness Act, while still being debated, is surely going to change the way businesses and consumers interact in online retail spaces. However, no matter if you are for the Act or against it, you need to be prepared for the possibility of it passing. Learn the different aspects of the Act, prepare your inventory, and have a plan to deal with potential fluctuating sales.