Legislation aimed at closing tax loophole receives NACDS endorsement

ALEXANDRIA, Va. — Legislation that would level the playing field for brick-and-mortar retailers, including pharmacies, by closing a loophole that puts them at a disadvantage with online retailers has received praise from the National Association of Chain Drug Stores.

Sen. Mike Enzi, R-Wy., is the sponsor of the Marketplace Fairness Act and serves as the ranking Republican member of the Committee on Health, Education, Labor and Pensions.

In a letter sent to Enzi, NACDS stated that the Marketplace Fairness Act would help retail-based health providers by permitting states to collect the sales taxes they are owed from out-of-state businesses, rather than relying on consumers to pay those taxes, which is the current system.

“For too long, remote Internet retailers have enjoyed an unfair and competitive advantage over local brick and mortar retail establishments,” NACDS stated in its letter. “Online-only companies can achieve as much as a 10% price advantage over brick-and-mortar retailers by not collecting state sales taxes. This not only hurts local businesses, it robs state governments of vital tax revenue. It is estimated that states lose $23 billion annually in uncollected sales taxes, a figure that is sure to grow as Internet commerce expands.”

NACDS noted that state budgets already face heady financial challenges, and this tax loophole only further stymies a state’s ability to continue to fund important programs.

“At a time when state governments are struggling to fund important public health and safety functions — including Medicaid health benefits for low income citizens — it is vitally important to give states all the tools they need to collect revenue they are owed.  Your legislation is a strong step in that direction,” the letter stated.

NACDS also recently joined retail groups in submitting a letter to the Joint Select Committee on Deficit Reduction — the super committee — urging the committee to close this loophole as part of its efforts to curb wasteful spending.

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