Are there potential prescriptions on Beacon Hill for what ails the state’s brick and mortar retailers?
Massachusetts retailers say they’re getting squeezed by unfair tax-free online competition and state regulations, and they want some relief. Who wouldn’t express support for their local merchants, who provide jobs, pay local property taxes and contribute to their communities in other ways, including sponsoring Little League teams, supporting charities and providing volunteers for nonprofits? But, then again, who hasn’t bought something online?
How state government can deliver relief is a complicated and challenging question, but fortunately, it’s one that the state Senate’s leadership isn’t going to dodge.
Senate President Stan Rosenberg, D-Amherst, and Senate Minority Leader Bruce Tarr of Gloucester have formed a Senate Task Force on Strengthening Massachusetts Local Retail.
“Through this effort the Senate hopes to find ways to help them compete effectively in this ever-changing economy,” Rosenberg said.
The panel, charged with reporting back to the Senate this coming May, will look at key issues, including challenges that retailers face in competing against e-commerce, the impact of store closures on local economies and property tax bases, retailers’ own initiatives to increase market share, and how state and local governments can encourage local shopping.
The move comes amid calls for reviving the state’s annual sales tax holiday, cutting the sales tax itself and finding ways to force online sites to charge a sales tax.
The 13-member task force will include a member of the Retailers Association of Massachusetts, five large and small retailers from around the state, and seven senators.
Rosenberg seems to be trying to get ahead of possible ballot questions that would affect retailers. He expects a referendum in 2018 seeking to raise the state’s minimum wage to $15 an hour, which undoubtedly would put more pressure on retailers large and small.
RAM President Jon Hurst said his organization is weighing whether to submit its own ballot question to lower the sales tax, a move that legislators would instinctively shy away from because it would cut directly into the state budget. Each 1 percent of sales tax represents about $1 billion in revenue, according to an aide to Rosenberg.
The Senate president said an attempt to collect sales tax from online retailers on the basis of information-collecting “cookies” in customers’ computers is being challenged in the courts, but when giant retailers like Amazon build distribution centers in Massachusetts, the state can force them to collect the sales tax for purchases by in-state customers, in accordance with federal law.
As a result of a 1992 Supreme Court decision, states can only force internet retailers to collect sales tax if they have a physical presence in the state.
Hurst notes that largely tax-free online sales have been growing “exponentially,” and he complains that Massachusetts further handicaps retailers by requiring that they pay employees time-and-a-half on Sundays and holidays.
“It’s tough enough when you’re competing with sellers all over the world and our consumers never have to leave their living room to buy something and have it delivered to their front doorstep within hours, tax-free and freight-free,” Hurst said. “But then to have mandates requiring you to spend a lot more to employ people than competitors on the smartphone have to do, that’s deadly to countless small businesses on Main Streets and the retail sector in the commonwealth.”
So, retailers see ways state government can relieve some of the presssure that is being caused by larger forces in the marketplace, and are hoping for other fixes. We’re hoping that the Senate task force can identify those other fixes and sort out the competing tax and spending issues.
It sounds like a big challenge, but we’re pleased to see our state leaders willing to take it on, because it’s hard to imagine our cities and towns without their brick and mortar stores and all that they contribute to healthy communities.