Retailers' sales tax battle with e-tailers now has a face - | Chattanooga News, Weather & Sports

Retailers' sales tax battle with e-tailers now has a face (and a foot)

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CHATTANOOGA (WRCB) -- Terri Holley has kept Embellish, a shoe boutique in Downtown Chattanooga's Warehouse Row, on firm footing for six years.

A tough walk in a business in which 'well-heeled often means three inches or higher.

"I'm all about taking care of my individual customers," she says. "But I want a level playing field."

On-line competition has made the perch more precarious.

"I do have women come into my store, where my staff and I will spend the time, work with the women, help them decide style, fit, but they'll buy it online from Zappos," she laments.

Doing so avoids Tennessee's sales tax; 9.25 percent when Chattanooga's local option is added.

"I know that we have lost sales to those web sites," Holley says.

Tennessee's Governor, U.S. Senators and a number of retailers maintain that the disparity stretches beyond lost sales, but in lost opportunities and services such sales tax dollars would have provided.

"It's probably $2-300 million a year in sales taxes, that aren't being paid," Gov. Bill Haslam tells a statewide teleconference Thursday morning.

"We've always said we think that this is an issue that requires a national solution," says Rod Bradham, Vice President of Public Strategies for the Chattanooga Area Chamber of Commerce.

Senators Lamar Alexander and Bob Corker are co-sponsoring a 'Fairness' bill they claim will help equalize the competition between retailers and e-tailers.

"It's a states' rights act that gives the states the right to collect a sales tax that's already owed," Sen. Alexander says via statewide teleconference.

"If everybody paid what was owed, the legislature might even lower the tax rate for everybody."

The push is the latest effort of Stand With Main Street, a retailers' group that pressured Tennessee to rework the agreement that former Gov. Phil Bredesen cut with e-tailing giant to create several thousand jobs via two Fulfillment Centers, or distribution warehouses, in Hamilton and Bradley counties. Besides land and infrastructure improvements, Amazon was not required to collect sales tax from Tennessee customers.

Since then, Amazon has announced it will build at least two more such Centers in Tennessee.

The 'Fairness' bill does not establish a nationwide sales tax, nor does it mandate that states require online retailers or e-tailers to collect sales tax.

The lack of such a mandate would allow states to continue to use sales tax breaks as incentives to lure e-tailers, and create jobs. It also avoids establishing a precedent that the battle with Amazon risked creating; reneging on a promise.

"That was a concern," Bradham says. "Amazon did come to the table, to their (sic) credit, and offer a solution."

Amazon will begin collecting Tennessee sales taxes in 2014.

Stand With Main Street is urging retailers and customers to lobby their state lawmakers and Congressional representatives to pass the Fairness Bill.

"We need more Republican votes to get it passed," Sen. Alexander says.

For Holley, the battle is about more than boosting the foot traffic at Embellish.

"We feel we are providing an experience, a relationship with our customers," she says.

"You can't get that by going online and looking at shoes."

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