LANSING – A study funded by the Marketplace Fairness Coalition suggests passing legislation closing the loopholes that currently allow Internet retailers not to charge the state’s 6 percent sales tax would create a larger base and create the potential for reduce tax rates.
The study shows the state could increase jobs by 44,000 and gross state product by $12.7 billion during the next decade if Internet retailers also were required to collect the 6 percent sales tax like their brick and mortar counterparts.
“Closing the unfair sales tax loophole will protect small businesses in Michigan and kick-start our state’s economy in a big way,” said James Hallan, president of the Michigan Retailers Association. “Michigan retailers can compete with anyone in the world on price and product expertise but this unfair loophole gives out-of-state sellers a huge advantage. It’s time for lawmakers to do the right thing and stand up for our great local job providers.”
The U.S. Senate recently approved federal legislation on the issue. Legislation in the state House (HB 4202 and HB 4203 ) would make businesses that sell tangible property in the state subject to the sales or use tax if they use employees or facilities in the state to advertise or promote sales, or maintain an office, distribution facility, warehouse, storage place or similar place of business in the state to facilitate delivery to the buyer.
However, the state legislation would not collect much of the revenue lost due to the loophole, and supporters say a federal solution is needed. Still, supporters including Hallan also say the more states that adopt policies to collect sales tax from online retailers, the bigger a push the federal government gets to take action.
The coalition is a supporter of the federal legislation.
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