Our tax code has a giant loophole, and it’s getting bigger every day. Internet sales are growing, but sellers don’t have to collect state sales taxes, leaving it up to consumers to tax themselves.

This is a problem for the 45 states including Maine that have statewide sales taxes — a problem that collectively costs states billions of dollars every year that should be going to pay for roads, schools and health care. Several states, also including Maine, have passed laws requiring online businesses that do business in the state to collect the tax, just as local retailers have to, but the statute is difficult to enforce.

This is a problem that cries out for a federal solution, and Congress should act.

Internet retail sales have been growing explosively, and that trend is expected to accelerate as consumers who have lived their entire lives with the Internet get into their prime buying years. U.S. online sales are projected to grow from $263 billion last year to $414 billion in 2018, according to industry analysts. That’s bad news for states, which will have to find other ways to make up the lost revenue, and it’s bad news for brick-and-mortar businesses that have to compete for customers.

Internet businesses have enough built-in advantages over real-world stores. They don’t need an automatic discount that comes in the form of tax-free sales.

If this unfair situation continues, it may lead retailers to close stores and some national chains to become online-only businesses, which would not be good for communities.

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Stores do much more than sell merchandise. They buy or lease real estate, making them local property tax payers. They hire people who live in the community and spend their wages locally. Some of the biggest employers in the country are retail businesses. These companies don’t need a federal bailout, but they shouldn’t have to compete at a disadvantage, either.

It’s important to stress that the change needed is not a new tax or tax increase. It’s simply enforcing existing laws so that states can collect the tax revenue that’s legitimately due them. This is a matter of maintaining equity between different businesses and ensuring that state services get adequate support.

The concept of requiring Internet sellers to collect sales taxes has been broadly popular across party lines. Maine’s bill passed the Democratically controlled Legislature nearly unanimously in 2013 and was signed by Gov. Paul LePage.

Republican leaders in the U.S. House of Representatives, however, blocked a vote on a federal tax collection requirement bill. With about a week left in the year for the current Congress, however, there is still time to act.

The Internet is changing the way Americans shop, and our laws should be brought up to date. During the busiest shopping days of the year, lawmakers should consider passing a law that will help important businesses throughout the country and help states collect the revenue to which they are entitled.


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