Much is being said about the bill to require business to start collecting sales tax for online purchases. The detractors of the bill say it will be harmful to the poor and middle class (let's face it, it will). The proponents of the bill believe that this will some how help local businesses by making them more competitive. Still others seek to win the hearts and minds by accusing people of being tax evaders by shopping online - a ridiculous proposition to say the least. Additionally, people seem to be dodging the fact that shipping and handling on virtually all purchases.
In addition, many online retailers are already charging sales tax. Apple has been charging sales tax through their iTunes store for awhile now and this has not affected revenue, sales growth, nor has it benefited local music stores at all.
So why do people shop online? Surely it is more convenient and the ability to do research before you purchase the product is handy. Additionally, many times you just cannot get the item you are looking for locally anymore. And to be blunt, in many towns across America, non-local corporate stores have largely replaced mom and pop shops, so spending money locally is only marginally better and sometimes worse. Case in point, my local grocery store is Wal-Mart, so I have to leave town to avoid a retailer I hate.
But these are all just extras. The real reason people shop online is because you are buying from a global bazaar and there is a large opportunity for price arbitrage. Massive savings can be had online without sacrificing quality.
In the recent past, I've purchased a few items that illustrate that point dramatically:
1) I purchased a Delonghi EC702 espresso machine today. Local retailers are selling it for $220.00 (Bed, Bath, and Beyond) or $360 (Macy's)! Online, I purchased it for $160 + $11 s/h. Unless the sales tax will be increased to 31.25%, I've somehow managed to save $50 on this purchase.
2) I have purchased many used textbooks on Amazon (for my personal education) for $0.01. The market price for these books locally often hits $150, but I've picked them up from between $5.00 - $0.01.
3) I just purchased 3 bottles of 24.5 fl. oz. Torani Hazelnut syrup for $17.50 + free shipping from Amazon. A single 12 fl. oz. bottle in the store costs $6.99. This is an enormous savings.
So, in reality, the sales tax issue is a complete wash. The savings that can be had online virtually always beat shopping in a brick-and-mortar store. The sales tax issue was always going to be implemented at some point. So let's not worry too much about this because I guarantee no one will be purchasing offline over a measly sales tax.
