Home Between the Lines To the Editor: Close Tax Loophole For Internet Firms

To the Editor: Close Tax Loophole For Internet Firms


Small business is the lifeblood of communities and towns across this country. It is their spirit and ingenuity that fuels the economies of towns across the State of New Jersey. They are the job creators. They are the innovators. They are the entrepreneurs. A prosperous small business community translates into thriving downtowns, stable municipal budgets, and positive overall fiscal health for our local towns.

We represent more than 1,000 businesses throughout Central New Jersey, which employ more than 65,000 people who have a legitimate concern about how sales taxes are administered. When the welfare of New Jersey’s small businesses is threatened, the Mercer Regional Chamber of Commerce takes a position to assure fiscal fairness for all of our businesses, large and small.

Under the current law, New Jersey brick-and-mortar stores are required to collect and remit 7 percent sales tax on products they sell, while out-of-state, online-only companies are exempt. As a result, products from New Jersey storefront businesses cost 7 percent more than the same product that can be purchased from an Internet company. This creates an uneven playing field that threatens New Jersey retail businesses.

A new Rutgers University study finds that this tax loophole which Internet businesses are exploiting is costing New Jersey jobs and hundreds of millions of dollars in tax revenue. In 2009 alone, the study estimates that New Jersey lost $170 million in tax revenue, and that number is expected to grow to in excess of $300 million by 2015.

It’s unfair that New Jersey’s current tax laws place our job creators, the brick-and-mortar businesses, at a competitive disadvantage, while allowing out-of-state, online retailers to sell goods cheaper. This is unacceptable. This price advantage directly threatens our small business community, and we cannot afford to let this happen in our state.

Internet retail companies should collect sales tax just like every other business does across the state of New Jersey. We need to support efforts to level the playing field by addressing this issue in Trenton. Legislation must be passed requiring all retailers, online and off, to collect sales taxes when they are due.

While our government persists in cutting jobs, the private sector, a majority of which is comprised of being small business, continues to hire human capital at a consistent rate. Unless the system is fixed, more and more New Jersey businesses will be forced to close their doors. We must do everything in our power to prevent that from happening.

Robert D. Prunetti

President & CEO, Mercer Regional Chamber

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