EagleTribune.com, North Andover, MA

April 25, 2013

N.H., Mass. leaders divided over Internet sales tax

Shaheen, Ayotte oppose proposal

By Doug Ireland

---- — Kay Normington hopes to expand her online gift shop sales, but now she’s having second thoughts.

Normington, owner of The Kitchen at Windham Junction, already is tired of all the paperwork and the state requirements she must meet to continue running her small restaurant and gift shop.

Now, a bill before the U.S. Senate would require retailers who sell merchandise over the Internet to collect state and local sales taxes for those purchases. The taxes would be sent to the states where shoppers live.

The legislation is making some small-business owners nervous.

“That’s crazy,” Normington said yesterday. “It would definitely discourage me. It would definitely be a hassle.”

She said she already has enough to do to keep her 10-employee business running.

“There is already so much work involved,” she said. “It’s just not worth it.

Business owners wonder how they would be affected by the proposed Marketplace Fairness Act, especially in the Granite State. The state does not have a sales tax, nor a mechanism in place to collect one.

New Hampshire’s two U.S. senators are speaking out against the proposal, saying it would hurt business. Sen. Elizabeth Warren, D-Mass., supports the act.

Sen. Jeanne Shaheen, D-N.H, filed an amendment yesterday to exempt states such as New Hampshire that don’t impose a sales tax.

“The Internet sales tax legislation that the Senate is considering this week is bad for New Hampshire small businesses and our country’s economy as a whole,” Shaheen said in a statement.

U.S. Sen. Kelly Ayotte, R-N.H., is also a vocal opponent of the bill.

Shaheen and Ayotte spoke against the bill on the Senate floor this week, concerned that supporters of the tax are trying to push it through.

“Supporters of the online sales tax are trying to rush it through the Senate before consumers and businesses can rise up to oppose it,” Ayotte said.

She said the bill would turn “online business owners into tax collectors for other states.”

But Lacey Rose, Warren’s spokeswoman, said the Massachusetts senator favors the legislation.

“Sen. Warren believes that states should have the tools they need to ensure that big, out-of-state retailers compete with Massachusetts’ businesses on a level playing field,” Rose said. “She supports the Marketplace Fairness Act, which creates new tools to allow states to effectively enforce their existing sales tax laws.”

Some New Hampshire business owners said they were surprised to hear the legislation could affect them since the state does not have a sales tax.

That includes Jim Giguere, owner of Countryside Florist in Londonderry. Giguere said although online sales only account for about 20 percent of his business, the proposed tax could have a significant impact.

“That would make no sense here in New Hampshire,” Giguere said. “It would be a pain in the neck when you’re in a state that doesn’t collect a sales tax. It would be a hassle.”

Tom Hankins, co-owner of Backmann Florist in Derry, said he’s been reading about the Senate bill and wonders how the tax would impact his business. Like other small-business owners, he’s worried about the additional burden.

“It obviously creates more paperwork,” he said.

Nancy Kyle, president of the New Hampshire Retail Merchants Association, said her organization’s board is divided on the issue and will not take a stand either way.

Joseph Bevilacqua, president of the Merrimack Valley Chamber of Commerce, said he is inclined to support. His group has not taken a position on the legislation.

“I think it would help local businesses by leveling the playingfield,” he said.

Bevilacqua said Merrimack Valley merchants are at a disadvantage when competing against New Hampshire businesses.

“Our merchants are at a tax disadvantage against New Hampshire businesses and online businesses because neither has to pay sales tax like they do,” Bevilacqua said.

Staff writer Shawn Regan contributed to this report.