This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Building and maintaining roads, constructing schools and libraries and paying teachers, police and firefighters are just a few examples of how the taxes we all pay are used.
For many states, including Utah, an efficient way to collect some of the funds needed to maintain and improve our communities is through a sales tax charged on consumer goods. This method has worked well over the years to provide some of the funding needed to make our communities better places to live.
Historically, most retailers have been required to assist in the sales-tax collection process. However, a tax policy has existed for many years allowing retailers selling through catalogs and now the Internet to not collect and remit sales tax. What was once a minor issue for states in terms of lost revenue has ballooned into a huge and growing issue with the growth of Internet-based e-commerce. As more retail sales are conducted online, less funding for roads, schools, libraries, etc. is being collected. The result is that either other taxes will need to be raised to cover the shortfall or our quality of life, and especially our children's quality of life, will suffer unless these laws are updated.
Requiring Internet-based retailers to collect sales tax would not be a new tax. Utah law requires taxpayers, on their annual income tax returns, to pay the tax those retailers could easily collect. Not surprisingly, only a small percentage of Utahns actually declare the sales tax they owe on online purchases (only $200,000 was collected last year according to the Utah State Tax Commission).
Twenty-six other states have enacted marketplace fairness legislation. Why can't Utah? Even the largest Internet retailer collects sales tax in 28 states, including 19 of the 20 most populous states. Again, I ask, why not in Utah? The Legislative Fiscal Analyst estimates that Utah should be collecting nearly $190 million more a year in sales and use tax. Just imagine what good could be done with that additional funding, including improved roads, better schools, parks, and much, much more. Or, conversely, and as proposed in current legislation (HB 235), that additional money collected could be used to reduce the current sales tax.
This inequity in sales tax collection inherently favors online-only retailers over brick-and-mortar retailers and the nearly 270,000 brick-and-mortar retail jobs they provide Utahns. Thousands of local brick-and-mortar retailers, both big and small, collect these taxes on purchases every single day and remit them to the state. Beyond the perceived competitive advantage, because of this tax law, out-of-state online retailers get to use Utah-taxpayer funded roads, airports, public safety services, etc., without paying a penny in support of our state's infrastructure.
If sales tax regulations in Utah remain as is, we will be the ones to ultimately suffer due to diminished services and the negative effects on our quality of life. The time has come for all businesses to collect and remit their fair share of sales tax. For the benefit of all current and future generations of Utahns, I urge everyone to support HB 235, sponsored by Rep. Mike McKell and Sen. Curt Bramble.
Scott Hymas is CEO of RC Willey, which was founded in Syracuse in 1932. RC Willey has six Utah stores and 1,400 employees in Utah in addiiton to locations in Idaho, California and Nevada.