Worldwide retailer eBay is enlisting customers to push back against a new tax on online shopping that could pass the state Legislature this year.
In a step beyond traditional lobbying efforts at the Capitol, the company sent out emails to registered users this week urging them to contact lawmakers and say the proposed online sales tax would be harmful to small businesses.
Washington lawmakers have been considering a 6.5 percent tax on online shopping this year to help pay for the state’s two-year budget. Supporters say it also could help brick-and-mortar businesses compete with online giants like Amazon.
There are signs the tax might have enough support to pass.
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The Republican-led coalition in control of the state Senate has resisted the idea less than other taxes proposed by the majority Democrat House, signaling the tax might be on the table in a final budget compromise.
Perhaps with that in mind, eBay launched its initiative imploring residents to ask lawmakers through email and Twitter not to pass the legislation, calling it a burden on small businesses that “jeopardizes” the privacy of consumers.
“This is a drastic departure from current law,” states an email sent by eBay’s government-relations team to at least some users of the site. “It threatens to increase costs to everyone in Washington who takes advantage of the internet to buy from small businesses, artisans and even other consumers, undermining the very business model that allows online marketplaces to provide low-cost services and opportunities to Washingtonians.”
Sales tax currently only applies to online purchases if retailers in Washington are selling their own products to state residents.
When internet retailers such as eBay sell products from out of state, they’re not required to collect sales tax.
Washington residents do owe the state “use taxes” for online purchases that sales tax doesn’t apply to. But that tax is self reported and hardly ever gets paid.
The Democratic proposal would require online retailers located in any state to collect sales tax on purchases by Washingtonians or give customers details on how to pay taxes themselves.
In the latter option, retailers would be required to file a report each year with the state Department of Revenue including buyers’ names, their purchase, their mailing and shipping address and how much they spent.
With that information, the state could better collect the money it is missing out on with the “use tax,” said Rep. Kris Lytton, a Democrat from Anacortes who chairs the House Finance Committee and sponsored the legislation.
Her tax bill would only apply to companies that gross more than $10,000 in sales per year in Washington.
State Sen. Reuven Carlyle, a Seattle Democrat who has tracked the topic for years, posted on Facebook that the online tax plan was “bipartisan” and that other companies such as Amazon and Microsoft have been “more supportive of a solution.”
In an interview, he blasted eBay for opposing the tax.
“They continue to lead the charge to absolve themselves of any tax-collection role if the seller doesn’t have a physical presence in that state,” Carlyle said.
Other than eBay, some Republicans have been hesitant to implement the tax plan, too.
Sen. Dino Rossi, a Republican from Sammamish involved in budget negotiations, told the The News Tribune and The Olympian in May he wanted to see how such a tax works in other states before applying it in Washington.
Colorado has a sales tax for online retailers and some other states have considered it.
“Nobody knows exactly how it would work and the magnitude and the reliability of that prediction,” Rossi said.
eBay has been forceful in its opposition to the tax in Washington and elsewhere.
The company’s lobbying website says the proposal now in Olympia “adds new taxes to transactions that often involve the very smallest businesses possible, including artisans, rural Mom and Pop retailers and consumers using the internet to resell goods to promote a Green Economy.”
Other pages on eBay’s lobbying website are dedicated to opposing an internet sales tax federally and in other states. Its Washington state portion warns the idea could spread if lawmaker approve it here.
A search on Twitter shows some users already appear to have used eBay’s tweet suggestions to ask lawmakers to oppose the idea.
Lawmakers are currently in their second special session negotiating a budget.
They face a June 30 deadline for a partial government shutdown to pass a new budget but are at an impasse over how to pay for court-ordered changes to the K-12 school system.
Carlyle said in an interview he believes the tax on internet retailers is still on the table. Even if it doesn’t become part of a budget agreement this year, he said he’s confident the tax proposal eventually would be approved.
The tax would make things more fair for small businesses selling through storefronts, Carlyle said.
“If you buy something down the street from a mom-and-pop hardware store, or if you buy it on eBay, you ought to pay sales tax if you’re in Washington state,” he said.