Ca-Ching! Would an Online Sales Tax Make More West Des Moines Business Cash Registers Ring?

Business advocates in West Des Moines favor a federal law they say would level the playing field with online competitors that are unburdened by sales taxes.

West Des Moines Chamber of Commerce President Chris Voggessor said the Marketplace Fairness Act, which would require a sales tax for online purchases, is "a good first step."

"I believe that more discussion is needed around this issue and debate needs to include small business owners having a voice at the table," he said. "Something needs to be done to level the playing field for all involved."

Voggesser offered some caveats. 

"What Congress must not do is to continue to pass regulations and legislation that hurts small business or requires them to increase their overhead because they have to comply with newly created legislation that is not well thought out," he said. "The economy is getting better day by day but it is still a work in progress and any legislation not thoroughly thought out could bring yet another economic downturn." 

What do you think? Should Internet-based businesses be subjected to the same sales taxes as brick-and-mortar businesses? Tell us in the comments.

The Marketplace Fairness Act would require businesses with more than $1 million in annual Internet or catalog revenue to collect sales tax for online purchases and send them to the state where the buyer resides. A Huffington Post report cites a National Conference of State Legislatures estimate that states collectively lost $23.3 billion in sales tax revenue in 2012 due to online sales.

U.S. Senate could vote on the bill, which has bi-partisan support and the blessing of President Obama, as soon as today.

Supporters say the bill would help retailers battle a practice called showrooming, when shoppers survey a store's goods and then buy it from an online competitor. Ad Week cites Placed and Gartner research that 60 percent of customers use traditional retailers to examine items they intend to buy online.

Opponents say it would harm small business by making them tax collectors and "put them in a position of having to purchase software to calculate sales taxes, according to the Huffington Post report.

A University of Iowa marketing professor called the bill a mixed bag.

Overall, it should be an equalizer for traditional retailers, but tax collection can be complicated and may require added costs to execute, which could overburden small businesses that are already stretched thin, said Gary Russell, Henry B. Tippie Research Professor of Marketing.

"I think it is probably inevitable in some form, because lack of taxation you could argue does give online firms an unfair advantage," Russell said. "But, if this passes does this solve all the problems that online firms present? No, it doesn't."

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