Believe it or not, buying products online this holiday season doesn't mean you are exempt from sales tax. In fact, the state actually expects you to self report and pay what you owe. As mind-numbing as that sounds, it's true. If a company has physical presence in Massachusetts, it is required to charge you sales tax for online orders, report and pay the tax it has collected monthly.
What this all means is that every time a Massachusetts resident considers making an online purchase, businesses with a Massachusetts location are effectively at a 6.25% disadvantage compared to every other company in the world. One of the great things about being the Publisher of an independent local publication is you get so say what you really think like, "That is stupid."
Just this Tuesday, Governor Deval Patrick announced that he would cut state spending by $225 million in response to an estimated $540 million mid-year budget deficit. The Governor is also seeking legislative approval to reduce the estimated $9 million that goes to local aid for local cities and towns by 1%. This will hurt Brookline by about $50,000. Brookline is in nowhere near the financial hole as many other local communities, but every cut hurts. Just last week, the Brookline Board of Selectmen voted unanimously to change the town's residential rate to $11.65 and the commercial rate to $18.97 per every $1,000 for fiscal 2013. While this increase is only about 2%, my guess is many Brookline residents will have to adopt their own cost-cutting measures. Some estimates show middle class families in the United States losing as much as 40% of their net worth in the last 5 years.
It may seem smart to buy online from places like Amazon and save a couple of bucks in sales tax, but do you really like the idea that 99.9% of the state population who buy online from out-of-state retailers also won't report it?
According to the American Booksellers Association, a study was prepared by Cape Ann Economics and authored by Edward Moscovitch titled "The Impact of the Internet Sales Tax Disparity on Massachusetts Tax Revenues, Sales, and Jobs" The study concluded that this online sales tax disparity has cost Massachusetts' brick-and-mortars $280 million in revenue that could have supported an estimated 1,970 new jobs in 2011. For those of you who don't have your calculators handy, that's amounts to a loss of $17.5 million in state sales tax or about double what the state pays out in local aid to local cities and towns every year. There has been talk that the Governor is trying to woo Amazon.com to open a distribution center in Massachusetts. This will mean the online giant will actually be required to collect Mass sales tax. What about the other thousands of online retailers, though, what about those lost tax revenues? Further, how many local jobs would an Amazon distribution facility actually mean to us? Do you know of any good spots for a mega-warehouse in Brookline?
The sales tax loss is just the tip of the iceberg. According to Brookline Local First, if you shift as little as 10% of your expenditures to local independents, our local economy grows as much as 2-3 times. When you buy that book, or garment, or toy, or baked good, or game, or any number of things online or in-person from your local merchant, you generate local growth, reduce greenhouse emissions from trans-regional and trans-national transportation of goods, and help your out-of-work neighbors find employment. Not a bad return on the few extra bucks you have to pay in sales tax, which you know in your gut you owe whether you pay it online or not. If that doesn't sway you, maybe this will. If it wasn't for the generosity and community spirit of local independents, community fundraising efforts like the Feed Brookline Campaign and BrooklineHub.com Youth Awards, and dozens of equally worthy efforts that support critical organizations like the Brookline Emergency Food Pantry& the Brookline Teen Center would suffer.
Not only are you doing a noble community-conscious act by purchasing locally online, you actually get more for your money! Lucia Berman-Rossi, owner of Tiny Hanger on Pleasant St. tells us, "When someone wants to return an item they purchased online, they can just walk right in and change the item if it doesn't work. We wrap and ship gifts like it was for our own family, same day. We provide personal delivery to Boston, Brookline, and Cambridge; and if you order online and want to swing by, we'll bring it right out to your car."
Lucia is just one of many, many local retailers who go out of their way for their customers and their community because they love where they are and what they do. The sisters Meyers at Cause to Paws actually remember names of the pets they serve. Certifiable puzzle addicts staff Eureka Puzzles. There isn't a staff member at Brookline Booksmith who doesn't love to read. Isn't that where you want to buy your books, from people who love them? Is that not worth a lot?
So if you're buying it online or you want personal service, buy it from local people. Want to know if they are local or not? You can look for the Brookline Local First sticker, or better yet, ask for the owner when you stop by or call. In a locally-owned business, if you can't speak to the owner that minute, you will actually speak to someone who knows the owner. Then go to a non-local and ask for let's say, Mr. Starbucks.
By R. Harvey Bravman, Publisher