A bill introduced by Jack Reed and Sheldon Whitehouse and six other senators last week aims to make the competition between online and in-state business more equitable. The measure that has bipartisan support, the Marketplace Fairness Act, would require online and catalogue vendors to charge consumers a Rhode Island sales tax at their time of purchase.
At a gathering Monday at Learn All About It Toys in Warwick, owner Jeff Dronzek talked about the unfair competition he feels from online vendors. Dronzek, who opened his business in 2008, recently wrote a letter to the senators about supporting a bill that would level the playing field for businesses like his.
“It’s been one of those ongoing issues,” he said. “People think they don’t have to pay sales taxes online. It is required, but the vendors don’t collect it at that point.”
Dronzek said a similar bill was introduced about six months ago, but it never went anywhere. He believes people aren’t in support of it because they think they are going to have to pay a new tax, but that’s not the case. Dronzek said it’s a tax that’s always been there, but is going unpaid, causing a huge deficit in the state.
“I believe it’s going to help small businesses,” said Reed. “It will create a level playing field and put more Rhode Islanders to work.”
“Thank you for believing in our small business community,” Mayor Scott Avedisian said.
Reed said the proposed bill would raise $70 million in revenue for the state, all by simply entering into a more streamlined sales and use tax agreement. He said about 22 other states have already adopted such practices.
Dronzek said it’s not just small businesses that are in support of this policy, but national and online companies like Amazon and Target. He said the changes would not only affect businesses like his, but larger companies like Target. Because Target has physical locations across the country, they are subjected to each state’s sales tax. Competitors who exist only in the cyber world have since been more popular to those wishing to escape the tax.
“I get asked every day,” Dronzek said about the difference between his price and that of an online competitor.
Dronzek’s wife and co-owner of Learn All About It Toys, Jennifer, said the proposed bill is all about keeping the economy strong.
“It’s about everyone helping to contribute,” she said.