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State, Federal Proposals Seek To Add Tax To Online Sales

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MINNEAPOLIS (WCCO) – Consumers may not like it, but a lot of small businesses say it will help them survive. We’re talking about state sales tax being applied to online purchases.

The proposals in the Minnesota Legislature would put taxes on fewer items than the sweeping bill making its way through the U.S. Senate.

Retailers have been pushing for this for years, saying they can’t compete against online companies that don’t charge sales taxes.

States are also pushing for the sales tax change. Minnesota estimates that it lost $389 million in 2011 alone from sales taxes they could not collect from online sales. Roberta Bonoff, the CEO of local toy store chain Creative Kidstuff, says it’s about fairness.

“All we have been working for is to have a level playing field,” she said. “To have the tax advantage, it’s just different, we can’t compete with that.”

In fact, many shoppers price check on their phones. Consumers like Leslie Trest, who’s a mother of five, makes no bones about it.

“A lot of times, I see things I like and then compare it online to see what is the better deal,” she said.

The Minnesota Senate Budget proposal would expand the sales tax to some large online retailers like Amazon.com. The U.S. Senate proposal would expand the sales tax to anything you currently pay taxes for at a local store.

Both Sen. Al Franken and Sen. Amy Klobuchar support the measure, and if passed it has the potential to change the way people shop.

“It will simply help states, help brick-and-mortar shops, especially mom-and-pop shops on Main Street stay competitive,” Franken said on the Senate floor.

IF online sales are taxed, Trest said she will definitely change her shopping habits.

“I will probably spend more time shopping in stores, looking for better deals,” she said.

The base state sales tax rate is 6.875 percent – so that means for every $100 you spend online. You’ll have to pay almost $7 more than you used to.

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