Marketplace Fairness Act Would Level The Playing Field For Hawaii Merchants, Help Them Compete With Online Mainland Retailers
Washington, D.C. - Senator Mazie K. Hirono today took to the Senate floor to urge her colleagues to pass the Marketplace Fairness Act, legislation that would help level the playing field for Hawaii small businesses. Hirono, a cosponsor of the legislation, argued the bill would help local merchants compete with online retailers operating on the mainland.
In her speech, Hirono discussed how this legislation would benefit local businesses like Kona Stories, a bookstore in Kailua-Kona, Hawaii.
“Small shops like these are places that can teach visitors about the unique characteristics of our communities. They also help bring local people closer together around shared experiences and values. Unfortunately, these small businesses are the ones that are hurt most by the advantage that online merchants currently have because they don’t collect Hawaii’s sales and use taxes.”
Watch her speech on the Senate floor here: http://youtu.be/inkbtqlGeNQ
The full text of her address reads below:
Mr. President, I rise today to speak in support of S. 743, the Marketplace Fairness Act.
This legislation will put businesses in Hawaii on an even playing field with their out-of-state competitors. It does this by giving the States the authority to require out-of-state merchants to collect the same taxes that local merchants have to collect when they sell goods to a customer in Hawaii.
This is only fair.
I want to be clear about what this bill does and what it does not do. This bill does not impose a new federal sales tax. This bill does not require States to do anything. In fact, if this bill becomes law, nothing would change unless a State passes its own legislation.
What this bill does do is give States a choice. It lets each State choose whether or not to level the playing field for its local businesses.
In addition, this legislation provides a framework that ensures that States can exercise this authority in a way that ensures fairness for businesses of all sizes. For example, it requires any State that chooses to exercise this new authority to streamline its sales and use taxes, and to provide free software to calculate these taxes to out-of-state sellers.
And this legislation protects small online businesses by exempting any business with less than $1 million of annual sales.
The growth of the Internet has been one of the most significant drivers of innovation in history. More and more Americans rely on the Internet to run their small businesses, access educational and health resources, keep in touch with loved ones, and for entertainment. Expanding fast, affordable, and secure Internet access is an essential building block for a strong 21st century economy.
However, we must also be careful to ensure that while we’re promoting the economic potential of the Internet, we're also being fair to local businesses and entrepreneurs.
These are the businesses that populate the Main Streets of towns across the country—hardware stores, clothing stores, gift shops, and many, many others. These businesses create jobs, pay taxes, and provide needed goods and services in our communities.
In fact, in Hawaii retail businesses employ nearly 25 percent of the workforce—about 128,000 people. In 2012 these businesses generated $30 billion in sales in Hawaii, as well as $1.2 billion in tax revenue.
Many of these entrepreneurs don’t just want to contribute economically—they want to contribute to the culture and character of their communities.
For example, my office received a call from the owner of Kona Stories, a small bookstore in Kailua-Kona, Hawaii. Kona Stories opened in 2006 and sells over 10,000 titles of all kinds. But Kona Stories doesn’t just sell books—it also hosts book clubs, supports local authors and artists, and also helps promote other local businesses. The programs and meetings that Kona Stories hosts focus on promoting the local culture and character of the community.
Small shops like these are places that can teach visitors about the unique characteristics of our communities. They also help bring local people closer together around shared experiences and values.
Unfortunately, these small businesses are the ones that are hurt most by the advantage that online merchants currently have because they don’t collect Hawaii’s sales and use taxes. This makes online products appear cheaper because their prices don’t include state taxes—even though these taxes are technically still owed. That’s not a real competition—it’s an artificial discount that’s unfair to local “brick-and-mortar” businesses.
And it puts businesses in Hawaii like Kona Stories at a disadvantage. As a small business, they have a hard enough time competing with the online giants that can offer lower prices—even if they were collecting state taxes.
In addition to allowing states to level the playing field for their local businesses, S.743 would also provide a boost for State and local governments by letting them collect taxes that are already owed. According to a 2012 Hawaii Tax Review Commission report, fixing this situation would mean nearly $160 million in additional revenue for the State of Hawaii in 2013.
I want to be clear: that money does not come from new taxes. It comes from taxes that are already owed but are just not paid. That’s money that should be going to keeping teachers in the classroom, fire fighters and cops on the beat, and fixing our roads and bridges so we all benefit.
Overall, the Marketplace Fairness Act is a good bill.
It balances the need to preserve a vibrant and innovative online marketplace with the need to ensure fairness for local businesses. It also ensures that everyone is meeting their responsibilities with regard to paying State and local taxes.
That is why this legislation has such a broad range of support from business, government, and labor organizations big and small from all across the country.
In fact, my home state of Hawaii has been working to try and address this issue on the state level for years. Passage of the Marketplace Fairness Act will finally give Hawaii the ability to address this disparity and put our businesses on an even playing field. That will be especially important to the 2,000 local businesses that make up the Retail Merchants of Hawaii.
Mr. President, I ask that a list of Hawaii and National supporters be included in the Record.
I hope my colleagues will join me in supporting this important legislation.
I yield the floor.