Franchot urges shopping at Maryland stores, not online
More consumers are doing their holiday shopping online, but don’t expect Maryland Comptroller Peter V.R. Franchot to join them anytime soon.
Mr. Franchot, a Democrat, said Wednesday that he thinks out-of-state Web retailers are taking business from local entrepreneurs who “desperately need” to make money during the holidays.
Some national online retailers have also been a thorn in the side of state tax collectors, who say they lose millions in revenue each year to websites that fail or refuse to collect sales tax on the state’s behalf.
“I’m challenging all my Marylanders out there to get off this cyber kick and get onto Main Street,” Mr. Franchot said during Wednesday’s Board of Public Works meeting, acknowledging that his comments were “a little counter-trendy.”
Shoppers across the state are expected to spend about $9 billion this holiday season, according to the Maryland Retailers Association.
While Mr. Franchot said the holidays are crucial for business owners grappling with a sluggish economy, they are also an important time for state tax coffers.
Residents will pay a 6-percent sales tax on most items they buy, as required by state law. But some online vendors - including Amazon.com and Overstock.com - choose not to charge or collect the tax on grounds that they have no physical presence in the state.
The result, state officials say, is that such retailers are able to take money from Maryland businesses by charging slightly less and refusing to cooperate with state tax collectors.
This summer, state officials cited a University of Tennessee study that said Maryland loses $184 million a year in uncollected, online sales tax.
The state has limited authority in requiring that out-of-state businesses collect sales tax.
When pressed by Texas and other states, some online vendors including Amazon.com have filed lawsuits or broken ties with small businesses that formerly acted as distributors.
Kathleen Snyder, chief executive officer for the Maryland Chamber of Commerce, said she has found most online vendors already enforce the sales tax, but Maryland should still simplify its tax laws to make collection easier.
She also said national online vendors are not necessarily a threat to local businesses, and that local entrepreneurs will simply have to adapt by improving their online presence.
Ms. Snyder added that business groups and the state have helped local businesses to establish and improve websites and that many consumers’ migration toward online shopping is inevitable.
“It’s convenient,” she said. “They don’t have to deal with parking their cars. It is a reality of life. If you’re not connected to the Internet and not connected to customers globally, then you are missing the boat.”
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