Knoxville businesses talk about Internet sales tax

Knoxville businesses talk about possible effect of Internet sales tax

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"I think online shopping has become so easy and so maybe with something like an added tax it will encourage people to come out more and come in on foot," said Nothing Too Fancy manager Lisa Cyr. "I think online shopping has become so easy and so maybe with something like an added tax it will encourage people to come out more and come in on foot," said Nothing Too Fancy manager Lisa Cyr.
"What we need is an environment in which we have a level playing field," said Director of the UT Center for Business and Economic Research Dr. Bill Fox. "What we need is an environment in which we have a level playing field," said Director of the UT Center for Business and Economic Research Dr. Bill Fox.

By JESSA LEWIS
6 News Reporter

KNOXVILLE (WATE) - A vote in the U.S. Senate could lead to making tax-free shopping on the Internet a thing of the past.

The measure is called the Marketplace Fairness Act.

It allows states to require online retailers to collect taxes, even if that business does not have a physical presence in the state.

The tax revenue would be sent to the shopper's state.

"What we need is an environment in which we have a level playing field between the person who opens up their store in Turkey Creek and just tries to compete and the firm that's selling us goods from Oregon or Washington," said Director of the UT Center for Business and Economic Research Dr. Bill Fox.

The Marketplace Fairness Act could renew some interest in shopping in person.

"We have certain brands that we carry that are also on the Internet and people can come in here and look at our merchandise and do a calculation of what they could buy the merchandise for online and not pay any tax and in some cases not pay any freight, and that hurts us, with a store full of merchandise," said Matthew McClellan, owner of M.S. McClellan & Co.

Dr. Fox says the state is losing about $400 million in sales tax revenues because of online shopping.

Dr. Fox added that if the act passes, that doesn't mean all $400 million would come in to the state.

The act would only affect online retailers that bring in more than $1 million in sales a year.

"There are literally millions of small businesses doing Internet sales with less than a million dollars in revenue, and so millions of firms would be excluded. This legislation will in fact apply to about 1,000 firms," Dr. Fox explained.

Even stores that don't know to what extent the act would affect them see how it could increase foot traffic.

"I think online shopping has become so easy and so maybe with something like an added tax it will encourage people to come out more and come in on foot," said Nothing Too Fancy manager Lisa Cyr.

Both of Tennessee's senators voted for the bill. It now goes to the House.

A spokesman for Congressman Chuck Fleischmann tells us he's taking a look at the bill and listening to constituents.

Congressman Duncan's office had a similar statement: "Congressman Duncan has very mixed feelings about the bill. He hates to increase taxes on anyone; but on the other hand, he hates to give an advantage to big out-of-state companies."

Congressman Phil Roe's office says he has not yet taken a position on the measure.

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