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It is time for legislators to even the field on sales tax

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I’m a Republican and free-market conservative. I believe in a limited government, individual liberty and free will.

Competition and capitalism are in my DNA. These ideals led me to launch my own small business – Pinnacle Peak Ace Hardware – and for the past 15 years my family and I have put our heart and soul into this store, our 27 employees and the customers we serve.

We’ve been through a lot, including the rise of big-box stores and – more recently – online retailers. I’m not afraid of competition. But, as an Arizona small business, it’s galling that my own home state has a tax code that places me at a distinct disadvantage with out-of-state competitors.

John Arterburn

John Arterburn

I’m talking about the sales tax that my store and every other retailer with a physical location in Arizona must collect and remit on each product sold. Out-of-state, online retailers are exempt.

As a growing share of consumer dollars migrate online to “tax-free” sites like eBay and others, this poses a dire threat to local stores like mine and our employees. Fortunately, a U.S. Supreme Court decision last summer – South Dakota v. Wayfair – found that states like Arizona have the authority to require that remote, out-of-state sellers collect sales tax on product purchases by Arizona residents. For the first time in the Internet age, we have an opportunity to fix this fundamental inequity.

HB 2702 is our chance. This legislation extends Arizona’s existing sales tax to out-of-state, online retailers and marketplace facilitators anytime a tangible retail product is purchased by an Arizona resident. It’s that simple. Nationally, 82 percent of states with a sales tax (37 out of 45) have already taken steps to level the competitive playing field between local and out-of-state retailers. Arizona is now among only eight states yet to act.

HB 2702 is sponsored by Rep. Ben Toma, R-Peoria, and supported by a broad, bipartisan coalition that includes homegrown Arizona small businesses like mine, as well as large bricks-and-mortar and online retailers ranging from Walmart, Target and Walgreens to Amazon. Local municipal and county elected officials across our state endorse HB 2702 also, because they recognize the tax revenue they depend upon to fund public safety and other basic services is threatened by this gaping loophole in our tax code.

As always, the opponents of HB 2702 will say it’s too much, too soon. They’ll invent strawmen and beg for more time to “study” the issue. To them I say, I’ve been waiting 15 years already.

Where were the opponents of HB 2702 while Arizona small businesses like mine saw more and more of our customers take their purchases to tax-exempt havens online?

Where were they as too many Arizona retailers became little more than showrooms for consumers to try a product before purchasing it tax-free online?

Policymakers and businesses large and small have spent the last eight months working feverishly in the wake of the Supreme Court decision to craft legislation that finally – finally! – corrects this fundamental unfairness in Arizona’s tax code.

No, we’re done waiting. It’s time to act. This year, the biggest thing legislators can do to support small businesses like mine is to vote YES on HB 2702.

John Arterburn is a Scottsdale resident and the owner and operator of Pinnacle Peak Ace Hardware.

One comment

  1. The flip side of your concern is that now every other state and taxing district in the US (over 10,000 in all) will be able to demand collection and audit every Arizona small business that dares to sell online. It’s a double edged sword, one that dictates that small business stay local only, brick and mortar only or face a piranha feeding frenzy of hungry tax districts all over the country.

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