Thursday, April 7, 2011

The Sales Tax Struggle

Okay, so that's one of the most boring-sounding titles I've ever come up with. However, sales tax can literally kill an independent bookstore, at least if a major competitor doesn't have to pay and we do.

Hopefully you can read the above map, but if not, the green areas are all states in which Amazon has cut ties with all affiliates because of being asked to keep track of sales tax. That's right; in Colorado it wasn't even about Amazon paying the sales tax itself, but requiring its affiliates to track it. To put it bluntly, Amazon has built its business model on not collecting or tracking sales tax. Its defense is that the burden is too onerous.

Well, it is indeed onerous for us to collect sales tax and pay it. It's onerous for our customers to pay it too. But it is the law, for everyone except Amazon and its ilk. Stores like Barnes & Noble and Walmart, both of whom have heavy online presences, manage to collect and submit sales tax, so obviously it is not an impossible feat.

Now I know that every little bit helps when it comes to a tight budget. But: our argument is that it;s unfair for Amazon to get to play by different rules. Any customer buying with Amazon right now gets a 6 to 7% savings right off the top by not paying sales tax, let alone the under-cost discounts that Amazon uses to get people "in the door", so to speak. Amazon can dictate its discounts from publishers to a certain extent, just like Walmart does, because of the massive quantities it orders. Sadly, our store is not in a position to order hundreds of thousands of copies of a title in order to get that extra 10% discount, so we have to charge more. We also have to pay rent and utilities on our store space, employee payroll, and all those other things that Amazon skimps on.

So, paying sales tax in our store means that books cost more. In fact, our books cost more, period. But believe it or not, we're not raking it in. An extremely well-run bookstore gets a 2% profit margin. We try to give value with our community events and author signings, with book clubs, with great customer service and recommendations, and by knowing your name if you shop with us. But we do have to charge and collect sales tax.

I have a feeling that Amazon's days of avoiding taxes will be coming to a close. They are taking advantage of an antiquated law from the 1990's, when the internet was not nearly so well developed, and internet businesses needed all the advantages they could get. But Amazon is being quite litigious and ruthless about holding onto said advantage.

So, we hope that you do see some value in shopping with us. And think: the sales tax you pay goes to pay the salary of your neighbor who works at the university. It helps with fighting the Crystal Mountain fire. It keeps our roads safe, and our water clean. In fact, that sales tax does quite a bit. While I do understand the tight financial situation that many of us are struggling with in this economy, paying sales tax in your local business is actually really good value.

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