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Editorial: Senate task force hears retailers’ concerns

  • Joe Blumenthal, owner of Downtown Sounds in Northampton, speaks to a dozen members of the Senate Task Force on Strengthening Massachusetts Local Retail during a hearing in Northampton on Feb. 5. About 60 people attended the hearing to voice concerns. GAZETTE FILE PHOTO


Tuesday, February 13, 2018

We commend the Senate Task Force on Strengthening Massachusetts Local Retail for conducting hearings across the state to understand the issues facing brick-and-mortar business owners.

Task force members were in Northampton on Feb. 5 and, not surprisingly, the biggest complaint by retailers is that the state does not collect a sales tax from most online transactions. Joe Blumenthal, owner of Downtown Sounds in Northampton, was among those who described the advantage that e-commerce has over small, local retailers.

“The state needs to really pay attention to the fact that so much of retail has shifted from brick-and-mortar to online. On a $2,000 guitar, I have an automatic $125 disadvantage,” Blumenthal said, referring to the state’s 6.25 percent sales tax that he must collect.

Other concerns voiced by retailers include the prospect of the state’s minimum wage increasing beyond the current $11 an hour, rising health insurance costs and the possibility of a guaranteed paid family and medical leave program in Massachusetts.

The task force was created by Sen. Stanley Rosenberg, D-Amherst, in September when he was Senate president. After a series of hearings, it is expected to deliver recommendations to the Legislature by June.

Among its members is state Sen. Donald Humason, R-Westfield, whose district includes Easthampton and Southampton. After the hearing in Northampton, Humason said he is “cautiously optimistic” that the Legislature will act on the task force’s recommendations.

“Something’s got to be done because we really seem to stand on a precipice where a lot of retailers are at that brink. We don’t know if they’ll be here tomorrow, or next week, or next year — they may very well not be,” he said.

We applaud Republican Gov. Charlie Baker for taking steps last year to require most out-of-state online retailers to begin collecting sales tax on its transactions with Massachusetts consumers — though that regulation was stalled when an online consumer electronics and automotive parts retailer filed a lawsuit.

Online retailers long have contended that a U.S. Supreme Court decision in 1992 known as the Quill ruling protects them from having to collect sales taxes on transactions in any state where they do not have a physical presence. In Massachusetts, that applies to most e-commerce businesses, though Amazon has collected sales taxes here since 2013 after it opened an office in Cambridge.

The Baker administration argued that apps downloaded by consumers and files known as “cookies” placed by online retailers on a user’s computer should qualify as a “physical presence” in today’s world of electronic transactions. While that issue awaits a legal ruling, the U.S. Supreme Court in January agreed to hear a case that could overturn the 1992 ruling and clear the way for sales taxes on e-commerce nationwide.

The National Retail Federation, which represents internet and brick-and-mortar business, said it welcomes a new Supreme Court ruling. “Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that’s making it harder for Main Street retailers to compete in today’s digital economy,” federation president Matthew Shay said in a statement. “This is a basic question about fairness, which all of our members deserve whether they’re selling in stores or online.”

The Supreme Court is expected to hear arguments in April, and we hope that it rules to make online retailers subject to sales taxes. If so, Massachusetts should be ready to immediately require their collection.

Meanwhile, we urge the Legislature to seriously consider the task force’s recommendations about the impact on retailers of raising the minimum wage and requiring paid family and medical leave. If the Legislature fails to act, both measures likely would be placed on the ballot for a statewide vote in November.

While we believe that both proposals have merit, we also recognize that taken together they would have a major impact on businesses. Ballot questions often fail to consider all the ramifications of complex issues. That’s why we support carefully crafted legislation to again raise the minimum wage and establish family leave, rather than referendums.

Judith Herrell, owner of Herrell’s Ice Cream & Bakery in Northampton and one of the retailers on the task force, said her goal is legislation that makes the state more competitive: “You want successful businesses.”

That’s a no-brainer for lawmakers as they consider how to strengthen the environment for retailers.