Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at email@example.com
U.S. Rep. Steve Womack, R-Rogers, said his experience as mayor of Rogers was the driving motivation for his support and sponsorship of a bill that aims to make online retailers pay the same state sales taxes as "brick-and-mortar" businesses.
The legislation, H.R. 3179, also called the Marketplace Equity Act, would force all retailers — online or not — to collect and remit sales taxes in Arkansas and other states where goods are sold. There is a related bill in the Senate, S. 1832. Both measures are related to a state law passed in the 2011 Arkansas General Assembly that addressed tax fairness for different types of retail operations.
Womack recalled that his 12 years as mayor of Rogers saw unprecedented regional growth leading to tens of thousands of new city residents that caused nearly a billion dollars of investment in infrastructure.
"[I]t dramatically changed I think the retail paradigm in the greater northwest Arkansas area as this emerging market developed," said Womack. "But I recognized early on that because of the way Arkansas is financed — the cities and counties, and in large measure, the state — that sales tax collections are very critical to our economic well-being."
Womack said city sales tax collections more than tripled over the course of a decade in the late 1990's and early 2000's. As mayor, he used the sales tax revenue stream to expand city services and fund infrastructure projects.
"It [sales tax] goes right to the heart of police and fire protection and quality of life issues, like parks and trails and infrastructure for further economic development and that sort of thing," Womack said.
Womack said without equity in the collection of sales taxes from local retail operations and online retailers, the local shops will disappear.
"When you’ve got a playing field that’s out of balance like this one is, I think it’s just a matter of time before we look up and see that these brick-and-mortar retailers are going to be gone and we’re going to be wondering, ‘How did this happen?’ And we can only look back to our inability to engage the proper legislative programs to level this playing field," Womack said.
The retail trade industry employs 133,600 workers in Arkansas. Another 44,000 workers are supported by the wholesale trade industry and 61,000 Arkansans are employed in the transportation and warehousing sectors.
Womack's comments were offered against the backdrop of a leadership council formed by a coalition of Arkansas retailers, government leaders, and business interests who support the federal legislation.
The Alliance for Main Street Fairness announced Thursday (Jan. 26) the launch of the Main Street Leadership Council, which will serve as advocates for interests wanting to see H.R. 3179 and S. 1832 enacted. The council also said it was concerned that without a change in the law, many business would be closed resulting in lost jobs.
“I’m the second generation of a 54-year old store. Simply put, allowing out-of-state businesses to sell items without collecting sales tax creates a competitive disadvantage that is not fair," said Craig Underwood of Underwood’s Fine Jewelers in Fayetteville. Underwood's store is a member of the leadership council.
"In our area, in Fayetteville, our sales tax is 9.125 percent, so you are approaching what appears to be a 10 percent discount by shopping out of state, even though the consumer still owes it. And if you look at the overall business environment as well, it’s not just what happens to the individual retailer with losing sales, but how that snowballs as it moves on down the hill," Underwood added.
The Arkansas Main Street Leadership Council members include:
Bill Underwood, Underwood's Fine Jewelers, Fayetteville
Jamie Darling, Darling's Fine Things, Newport
Chris Knodle, Golf USA, Fayetteville
Loyd Stanley, Stanley Jewelers Gemologist, North Little Rock
Jeff Beauchamp, Bedford Camera & Video, Fort Smith
Sen. Jake Files, R-Fort Smith
Randy Zook, Arkansas State Chamber of Commerce
Don Zimmerman, Arkansas Municipal League
Polly Martin, Arkansas Grocers and Retail Merchants Association