Pennsylvania Losing Hundreds of Millions of Dollars Each Year

New Economic Study Shows Potential Of $246 To $398 Million Being Left Out Of Budget Considerations Due To Loophole Exploitation & Uncollected Sales Taxes

HARRISBURG, Pa., May 3, 2011 /PRNewswire-USNewswire/ -- – A new economic study released today and compiled by Professor Robert Strauss of Carnegie Mellon University shows that Pennsylvania could be collecting between $246-$398 million in additional revenue per year by requiring online-only retailers without a physical presence in Pennsylvania, such as Amazon.com, to collect and remit sales taxes for Internet transactions, noted the Pennsylvania Alliance for Main Street Fairness.

"Pennsylvania is missing out on several hundreds of millions of dollars each year," said Professor Robert Strauss.  "If all Internet retailers were required to collect and remit sales taxes, it would increase tax receipts to Pennsylvania and increase sales at in-state stores."

Nationally, Internet commerce amounts to trillions of dollars of sales per year, and business and consumer purchases from Internet retailers are increasing rapidly.  However, Pennsylvania has a limited ability to make remote vendors collect and remit sales taxes for Internet transactions, and for 2012, it is estimated that such uncollected revenues range annually from $246 to $398 million for the Commonwealth.

"This study looked at all variables and methodologies in pinpointing a range for uncollected revenues," stated Strauss. "The range is important to consider in that it shows hundreds of millions of dollars being left on the table.  It is very clear that e-commerce is a systematically growing part of the Pennsylvania economy, and the amount of foregone revenues is on the order of several percentage points of current sales and use tax collections."

While Pennsylvania's budget would see a needed influx of revenue, Pennsylvania small businesses and that state's job market would also be rewarded.  Currently, all brick-and-mortar stores in the Commonwealth are at a tremendous competitive disadvantage to their online competitors with no physical presence in the state.  Considering a level playing field with their online competition, the study notes that Pennsylvania businesses could add between 1,530 to 2,766 new jobs.

"I compete daily with local businesses as I strive to meet payroll and add good-paying jobs in the Harrisburg area," said Greg Rozman, owner of Rozman Brothers Appliances.  "However, no matter how hard I compete with my local competition, I get completely outmaneuvered by my online competition that doesn't have to collect and remit our 6% sales tax at point of sale.  It's a travesty and one that our lawmakers must correct."

Pennsylvania small businesses have joined with the Pennsylvania Alliance for Main Street Fairness (PAMSF), the funder for this economic study, to inform the public and elected officials about the competitive disadvantage that they are facing.

"No matter how hard I work and try to out-market my in-state competition, the online retailers can and do dramatically undercut my prices," said Pattie Diggin, owner of Tales & Toys, located in Chadds Ford.  "In these trying economic times, every little bit helps as many small businesses squeak by year after year, or finally give up and go out of business.  Today's customer is always looking for some type of savings or discount, which I offer when appropriate.  I wish I could mark down my sales on a regular basis by an additional 6%, but I can't and it's a financial burden that is completely unfair.  It's time for Pennsylvania to make sure that everybody who buys taxable items collects and pays the tax on them.  The easiest and most sensible way is for remote vendors to collect and remit the tax at time of purchase.  They can do it, and as citizens we have a duty to make sure they do," concluded Diggin.

To view the economic study, click here.

The Pennsylvania Alliance for Main Street Fairness is a coalition of hundreds of Main Street businesses in the Commonwealth committed to educating private citizens, small businesses and elected officials about common-sense updates that can be made to our tax system to ensure there is a level playing field for both small businesses and online-only retailers concerning the collection of sales taxes.

SOURCE The Pennsylvania Alliance for Main Street Fairness