GRAND RAPIDS, Mich. (WOOD) — If you like the convenience of online shopping, you may have to pay more in the near future.
Two Michigan Lawmakers introduced legislation that would require more online retailers to collect the 6% sales tax for purchases.
Representatives Eileen Kowall of White Lake and Rob VerHeulen of Grandville introduced the
Main Street Fairness Act Wednesday. The bill would require online retailers with ties to Michigan to collect the standard 6% sales tax.
The Michigan Retailers Association says the state loses out on roughly $450 million a year in uncollected taxes for online sales.
Because of federal law, the bill will not effect sellers who don't have ties to Michigan. But sponsors hope to collect roughly $40 million a year from online sellers that are based in Michigan, own property in the state or have subsidiaries here.
That would include online sales giant Amazon, as lawmakers say the company has a subsidiary company based in Michigan.
"In fact, Amazon announced this past Monday they would start collecting Connecticut sales tax and it began collecting Arizona's this past week Friday," said James Hallan, president and CEO of the Michigan Retailers Association.
Now Michigan wants its piece of the pie.
Kowall and VerHeulen, both Republicans, say the bill is about the state losing out on millions of dollars in sales tax -- but it's also about leveling the playing field for brick-and-mortar stores that contribute to local communities.
"These local businesses are also the ones that support our little league teams. They're involved in our Kiwanas Clubs, or Optimus Clubs and charities or whatever. They're the ones that are deeply embedded in our communities and provide jobs," said Kowall.
Barb Stein owns Great Northern Trading Company in Rockford, a lodge and cabin gifts retailer. She has been in business for 35 years -- but with more and more people shopping online, she's finding it harder to compete.
"The Internet sales are increasing every year, the local retailers sales are going down every year," said Stein.
Stein thinks not having to collect sales tax gives online retailers outside Michigan an unfair advantage and keeps shoppers out of stores like hers, which are part of the fabric of the local community.
"I can tell you that every school in this area comes in here and asks for donations to carnivals and fundraising events and for sports teams and things like that and they're not going to get any money from the online retailers for those kinds of things," Stein.
Dan Marshall, owner of Marshall Music Company in Wyoming, is in the same boat. He was side-by-side with lawmakers in Lansing when they introduced the legislation.
"That additional 6% hurdle is something that we just can't overcome," said Marshall.
As the law stands now, it's up to consumers to pay a 6% use tax for online purchases. Taxpayers are supposed to do that when they file their taxes. According to the Michigan Treasury, 107,000 people paid that tax in 2011, with the state collecting only $5.7 million for online sales and missed out on some $450 million.
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Michigan is governed as a republic, with three branches of government: executive, legislative and judicial. The state also allows direct participation of the electorate by initiative, referendum, recall, and ratification.