Additional Research Finds Online Sales Tax Disparity Limits Ohio Holiday Sales Growth By $137 Million This Season

COLUMBUS, Ohio, Dec. 14, 2011 /PRNewswire/ -- Ohio retailers will lose $137 million to online sales this holiday season because of sales tax inconsistencies, according to additional research conducted by the University of Cincinnati's Economics Center for the Ohio Council of Retail Merchants.

The new analysis also projects that the state and its local governments will lose an estimated $45.7 million in tax revenue this holiday season due to online sales tax avoidance.

The research – commissioned by the Council and its research arm, Focus on Ohio's Future – shows online retailers have an unfair competitive advantage as a result of avoiding collecting sales taxes on internet purchases. The Economics Center reviewed its earlier research on the impact of sales tax inconsistencies on Ohio retail sales and its estimate of 2011 holiday season sales as the basis for its latest projections of lost sales and tax revenue.

Gordon Gough, Executive Vice President of the Ohio Council of Retail Merchants, believes that holiday sales for Ohio retailers would increase if all out-of-state online retailers were required to collect sales taxes. According to a report released last month by the Council, holiday sales are projected to increase 3.31% this season over 2010.

"It is encouraging to see holiday sales projected to increase in Ohio this year," Gough said. "However, the sales tax disparity between brick and mortar retailers and online merchants continues to be a significant limiting factor on holiday sales growth in Ohio."

"Ohio retailers along with the state and local governments are losing out due to online retailers who avoid collecting sales tax," said Jeff Rexhausen, associate director of research at the University of Cincinnati Economics Center. "If the playing field is leveled, Ohio retailers would see an additional increase of $137 million in sales this holiday season and over $600 million annually."

Local businesses agree that the online sales tax issue needs to be addressed.

"Often times a customer will walk into our showroom, browse our jewelry selection, and walk out only to go buy a similar item tax-free on the internet," said Jack Seibert, owner of Jack Seibert Goldsmith & Jeweler in Columbus. "I am all for competition in the marketplace, but this online sales tax loophole puts Ohio retailers at an unfair disadvantage."  

The U.S. House Committee on the Judiciary recently held a hearing to discuss the authority of states to collect sales tax on online purchases. S. 1832 – the Marketplace Fairness Act – aims to level the playing field for brick and mortar retailers and was introduced last month by a bi-partisan group of lawmakers in the U.S. Senate.

The UC Economics Center reports and more information about Focus on Ohio's Future are available at www.focusonohiosfuture.org.

About the Ohio Council of Retail Merchants and Focus on Ohio's Future
The Ohio Council of Retail Merchants is a leading Ohio trade association representing various companies along the business supply chain. The Council maintains a robust membership that includes 3,600 companies, ranging from Fortune 100 corporations, to influential regional businesses, and local enterprises that operate across Ohio. Focus on Ohio's Future was established by the Council to provide insightful research relating to Ohio's retail sector and the state's overall economy.

Media Contact:
Bob Tenenbaum
(614) 313-2315
[email protected]

SOURCE Ohio Council of Retail Merchants