Lawmakers considering taxing online purchases

Arizona small business owners are fighting for sales tax equality with online retailers, trying to collect taxes on goods that consumers buy online.

Experts said Arizona’s tax system complicates the situation.

A bill in the Legislature would require online retailers who do not have a brick and mortar building in the state to pay sales taxes on goods purchased by Arizona customers. Business advocates tout House Bill 2702 as a way to reduce the disadvantages of local brick-and-mortar businesses that compete with web-based businesses.

“A lot of small businesses are operating in very unbalanced markets,” said Thomas Barr, executive director of Local First Arizona.

The bill would affect such web-based businesses as Etsy and Wayfair, which do not have facilities in the state. Amazon, which has warehouses, does pay such taxes to Arizona.

“When laws like this are not enforced for all the businesses that sell the same type of goods,” Barr said, “then it’s bad for business in Arizona because that keeps less taxes in Arizona, it creates less jobs in Arizona, and these are things that contribute to the overall well-being of our community, like our parks being funded. We tend to forget how many people are employed by small businesses.”

Small and local businesses have a major impact on the state’s economy, employing 1 million people in 2015 and making up 99.4% of Arizona businesses. More than 6,000 small businesses are exporters in the state and generate 23% of Arizona’s nearly $21 billion in total exports.