In testimony to the House Judiciary Committee, eBay, the country’s largest small business auction website, said the government’s attempt to levy a sales tax would kill jobs in the middle of a recession.
At the hearing, eBay said hundreds of thousands of small business entrepreneurs can use their low-cost platform to open a business outside their geographic location. This wildly popular website literally opens a small town business to the world.
“You hear a lot about fairness in this debate. Some have claimed that a ‘level playing field’ means all retailers using the Internet should be held to the same remote sales tax standard,” said Tod Cohen Vice President of Global Government Relations and Deputy General Counsel for eBay Inc. “However, sameness is not fairness. Small businesses retailers face many competitive disadvantages when compared to larger retailers. They have proportionally higher costs of doing business, including providing employee benefits.”
Across the country, small businesses continue to lose ground with large corporations and eBay suggests their business model provides entrepreneurs with an outlet to compete in a global market place.
“Do those who want a ‘level playing field’ demand that all small business retailers get the same tax credits, the same sales tax exclusions and the same shipping rates? If and when they do, we will be the first to endorse changing Quill and lifting the prohibition against remote sales tax collection and remittance,” Cohen explained to Congress.
In an effort to provide Congressional members with an alternative to a straight tax, eBay executives suggested Congress should provide entrepreneurs with a small business exemption.
“Congress has the power to address abuses and inequities without raising new costs on small business retail entrepreneurs,” Cohen said. “A real Small Business Exemption would do that. A real Small Business Exemption would protect small retailers who are already falling behind. Permanently protecting small business retailers from national remote sales tax collection burdens will promote new retail competition.”
EBay also pointed to the Census Bureau and Forrester Research that showed “in-store retail represents 93 percent of all retail in 2012 and only 7 percent represents online retail.” Small eBay businesses argue this small number should exempt them from a remote sales tax.
Small business entrepreneurs said they operate with a razor-thin profit margin and say shipping costs eat at their bottom line. If Washington added a remote sales tax many businesses would be forced to close down, according to eBay.
For these reasons, eBay and many of their users support House Resolution 95, a bi-partisan resolution that opposes new tax collection requirements for small online businesses with a small market share.
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