This New York internet sales tax would hurt small businesses

In barely more than two decades, the ability to conduct routine commerce over the Internet has revolutionized how we shop and how we pay for what we buy. Online commerce also has restructured the physical side of retailing; you can buy and sell from anywhere.

Retailers with global reach range in size from mammoth corporations to individuals working from a laptop computer at home. The number of online retailers going global is staggering. A 2018 study by eBay showed that, in New York State alone, 97% of small businesses selling over that web platform were exporters — a far higher rate than among businesses not online. Moreover, those small businesses reached on average 18 different countries annually, again dwarfing traditional export reach.

Significantly, in an era when we hear about the urban-rural economic divide, small businesses trading via the internet operate and prosper in every corner of New York State — including counties where economic vitality has stagnated for years.

Like other disruptive technologies, e-commerce is prompting numerous public policy changes, with the system for taxing online purchases among the most significant. Last year, the U.S. Supreme Court took a major step, ruling that states can require merchants to collect sales taxes for online purchases, even when the buyer is in another state.

The court’s decision will have a huge impact on tens of thousands of small retailers like us. With each state having its own sales tax structure — and the tax varying within some states due to local options — many adjustments loom for both online retailers and customers. We need a thoughtful, deliberate approach to collecting online sales taxes in each state.

Unfortunately, the New York State Legislature is rushing ahead with a scheme that threatens the viability of e-commerce here. It could be especially harmful to small online retailers who have emerged as economic bright spots in communities where business otherwise is struggling.

New York proposes to tax online sales not just by large companies but also those of very small companies and artisans — enterprises for which even a small increase in business costs for the tax-collection process could be devastating.

What’s more, this taxation plan is on a fast track, scheduled for imposition on June 1 — barely two months away, if the Legislature approves.

We are not opposed to the taxation of online sales; that basic issue has been decided. But the final scope and method of that taxation must be workable for retailers and customers alike, and it should not threaten the vitality of small ventures that are spurring economic vitality in communities that sorely need it.

What’s on the table now in Albany is a 19th-century “solution” for our 21st-century challenge. It would impede, and in some cases probably kill, small, internet-enabled New York companies seeking to expand their businesses and increase prosperity for all New Yorkers.

Finally, the June 1 implementation date is simply unworkable. There should be at least a six-month transition period for companies to comply with the law. State officials should have the authority to work with us to extend the deadline for individual companies if they can prove more time is needed to craft an efficient system.

As taxpayers and small-business owners, we believe all New Yorkers should have a process that’s fair for everyone. New York can and must find a better way to collect the taxes it is due from online sales without inflicting harm on the innovative companies that are driving America’s online retail revolution.