The benefits of online retailing vs. brick-and-mortar store
We have always known that a physical store presence has a greater positive impact on the consumer than an online store. But the case is totally different if we look at it from the Tax lens. According to the rule the retailers are suppose to collect 10% of sales tax on every transaction. The state levies this rule strictly on the brick-and-mortar stores but the online retailers manage to somehow hide behind the outdated system and do not collect the tax. In this way the online stores are able to provide competitive prices compared to the brick-and-mortar stores. Sadly the consumers also encourage this practice by using brick-and-mortar store as a showroom to physically look at the product and then ordering it online.
In this way prospective customers check out merchandise in-person but ultimately buy online, with the aim of avoiding the sales tax.
The loop hole in sales tax that online stores are enjoying
Retail market is a highly competitive environment. Even a difference of 10% has a huge impact on the choice of consumer. This tax loophole negatively affects the sales of the retail outlets and gives advantage to the online stores.
The need to improve Tax policy
The state needs to improve the policy and make sure that online stores also pay the sales tax. It is unfair for the retail outlet owners in every way. Retailers should be able to compete on trade attributes such as price and customer service, not government-imposed sales taxes. A sale is a sale whether it takes place on the Internet or at a small business, so same rules should be applied.
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