D.C. Indies to Mayor: Require Retailers Like Amazon to Collect Sales Tax

Printer-friendly versionPrinter-friendly version

Independent bookstores in the nation’s capital are urging Mayor Muriel Bowser to level the playing field for Main Street retailers by requiring remote sellers such as Amazon to collect and remit sales tax.  

In a letter dated September 10, ABA member stores in Washington, D.C., stressed, “Businesses like ours remain at a significant competitive disadvantage because large, remote retailers such as Amazon are skirting their responsibility to collect and remit sales tax to Washington.” The booksellers asked the mayor to clarify tax law to ensure that all retailers in the Washington “play by the same rules.”

“All we’re seeking is fairer competition — and this change wouldn’t cost the city anything,” said Bradley Graham, co-owner of Politics & Prose Bookstore, one of the eight signatories on the letter. “In fact, it would enable D.C. to garner tax money currently being lost. This is both the right, and, for the city, the financially beneficial thing to do.”

In the letter, the indies wrote: “While you proposed raising the sales tax rate in D.C. to help make up the gap in the budget, we believe clarifying sales tax law so that remote retailers such as Amazon are required to collect and remit is the best long-term solution. It would prompt more residents to shop locally, keeping more of D.C.’s money in the local economy. Not only that, it is the right thing to do: Remote retailers should play by the same rules as Main Street retailers like us. By allowing remote, online giants to skirt sales tax law, the District of Columbia is in effect subsidizing our competition.”

The booksellers also cautioned the mayor about providing large, remote retailers like Amazon with tax incentives for opening a warehouse or office in exchange for collecting and remitting sales tax at a later date. They noted, “Such tax incentives do more harm for the community than good. According to the Institute for Local Self-Reliance, Main Street retailers employ 57 people for every $10 million in sales, while Amazon employs just 14 people per $10 million in revenue. Therefore, as Amazon grows and takes market share from other retailers, the result is a decline in jobs, not a gain.”

The letter’s eight bookstore signatories are: Barstons Child’s Play; Bridge Street Books; Middle East Books and More; Politics & Prose Bookstore; The Potter’s House; Reiter’s Books; Teaching for Change Books; and Upshur Street Books.

Read the letter in full below.


September 10, 2015

The Honorable Muriel Bowser
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004

Dear Mayor Bowser:

On behalf of the undersigned independent bookstores located in the District of Columbia, we are writing to stress that the time has come to level the playing field for Washington’s Main Street retailers. Businesses like ours remain at a significant competitive disadvantage because large, remote retailers such as Amazon are skirting their responsibility to collect and remit sales tax to Washington. We urge you to act to clarify sales tax law to ensure that all retailers with nexus in the district play by the same rules.

Most large corporate retailers employ a broad network of online affiliates in the District of Columbia who act as sales agents for the retailer. These affiliates sign agreements with retailers and receive commission for each sale they generate for the remote retailer. Employing sales agents in the District we believe triggers nexus for a business. As such, these businesses should be required to collect and remit sales tax for online sales.

States across the country have passed laws requiring Amazon to collect and remit sales tax. New York was the first to do so, in 2008, and in just six months after Amazon began collecting, sales tax revenue increased in the state by $75 million. Just recently, in Texas, where Amazon began collecting in 2012, the state announced that from 2012 – 2014 sales tax revenue increased by $325 million.

We urge you to level the playing field. Under the current inequity, many consumers are making online purchases because they are under the false impression that online shopping is “tax free.” So, rather than spend their money locally, D.C. residents spend their money in other states via the Web. Indeed, each of us have had people come into our stores to browse inventory and talk about an item only to buy it online via their smart phones — while still in the store. It is called showrooming, and it is now a common issue for us all.

The sales tax inequity in D.C. is not only bad for retail stores like ours, it has a harmful ripple effect throughout the community — siphoning sales tax revenue out of D.C., where it is gone for good.  

When you took office, you inherited a $200 million budget gap. We appreciate the work you did in closing that gap, but the sales tax revenue issue is not going away any time soon. There is no question that part of the gap was due to lost revenue from D.C. residents purchasing products from remote retailers. This lost revenue, which will continue to grow as Internet shopping grows, is revenue that is used to pay for schools, first responders, and infrastructure. That is revenue that D.C. residents cannot afford to lose.

While you proposed raising the sales tax rate in D.C. to help make up the gap in the budget, we believe clarifying sales tax law so that remote retailers such as Amazon are required to collect and remit is the best long-term solution. It would prompt more residents to shop locally, keeping more of D.C.’s money in the local economy. Not only that, it is the right thing to do: Remote retailers should play by the same rules as Main Street retailers like us. By allowing remote, online giants to skirt sales tax law, the District of Columbia is in effect subsidizing our competition.

It is important to note that, in a number of states, Amazon has brokered tax incentive deals in exchange for opening a warehouse and agreeing to collect and remit sales tax at a later date. Such tax incentives do more harm for the community than good. According to the Institute for Local Self-Reliance, Main Street retailers employ 57 people for every $10 million in sales, while Amazon employs just 14 people per $10 million in revenue. Therefore, as Amazon grows and takes market share from other retailers, the result is a decline in jobs, not a gain.

So, while we want a level playing field, we strongly oppose the public policy of providing tax breaks to retailers in exchange for opening offices or warehouses and collecting and remitting sales tax. This is about enforcing sales tax laws fairly across the board. Amazon and retailers like it, with a broad network of affiliates in the district acting as sales agents, have nexus in the state. They should follow the same laws that we do.

Thank you for your consideration.

Sincerely,

Steven Aarons
Barstons Child’s Play

Don Allen
Teaching for Change Books

Brennan Baker
The Potter’s House

Kevin Davis
Middle East Books and More

Daphne Gaskins
Reiter’s Books  

Bradley Graham
Politics & Prose Bookstore

Philip Levy
Bridge Street Books

Paul Ruppert and Anna Thorn
Upshur Street Books