Valley Stream retailers push for level playing field

Following a recent U.S. Supreme Court decision, Valley Stream business owners are joining with retailers throughout Nassau County in calling for state legislation that they say would level the playing field between in-state and out-of-state online retailers.

The high court’s June 21 decision, South Dakota v. Wayfair et al., (see shaded box) will now permit states to mandate a sales tax for items bought online from out-of-state retailers. And local retailers want the state to ensure that a sales tax is charged, regardless of the sites from which online shoppers make their purchases.

First, though, state lawmakers must pass enabling legislation.

While retailers throughout Nassau County expressed optimism that the ruling would help curb competition with online retail giants like Amazon, Village of Valley Stream Treasurer Michael Fox was less certain

“Yes, the ruling will enable Nassau County to collect more in sales tax revenue,” he said, “and that will most likely benefit the county. It’ll benefit the cities, too, because the county is legally required to share sales tax revenue with them. So yes, towns and cities like Hempstead and Long Beach will probably gain. But the county is under no legal obligation to share sales tax with the villages.

That issue forms the basis for ongoing litigation initiated by the Village of Freeport, which Valley Steam has joined. (See related story, Page 4.)

Fox also questioned the extent to which mom-and-pop stores compete head-to-head with online retailers. “I’m not sure people shop online because it’s cheaper,” he said. “Once, maybe. But I just think we’ve probably gotten lazy.”

And although the 230 stores in the area’s largest retail complex, Green Acres Mall, ought to benefit, the complex stands on county land.

In theory, online purchasers are supposed to add the sales tax to their online purchases, as they did in decades past, when catalog and mail-order sales were popular. But most do not, and no mechanism currently exists to enforce the requirement.

Last Monday — Amazon Prime Day — dozens of Long Island business owners gathered in Plainview to rally for a state law to charge an online sales tax. They also pushed for websites like Amazon, Overstock and Wayfair to begin levying the tax before legislation forcing them to do so is passed.

Local business owners said strong support from a number of state and local legislators gave them confidence that such legislation would eventually be approved, and they were hoping a special session of the State Legislature would be called to address the issue before the new session begins in January

Michael Harrison, president and CEO of Axcelsior Strategic Solutions and a chamber of commerce consultant, said that the current state of affairs “creates an un-level playing field. We need legislation to be able to begin, and the South Dakota law should be a model,” he said.

The South Dakota measure has stipulations: Out-of-state online retailers are required to levy the tax only if their South Dakota sales exceed $100,000, or if they have more than 200 separate transactions with South Dakota customers. New York’s law should be as simple to follow, Harrison said.

Julie Marchesella, the past president of the Nassau Council of Chambers of Commerce, agreed. She estimated that Nassau County could see revenues of as much as $50 million to $100 million if the state were to pass similar legislation.

Long Island Regional Council Chairman John Cameron, of Rockville Centre, concurred generally with Marchesella’s estimate, but cautioned that even such a boon “isn’t a silver bullet.” According to a report entitled “Tax Alternatives for Long Island” that the council released earlier this year, the county needs to raise some $500 million in annual revenue. In the report, the council proposed a hike in the sales tax to 8..875 percent, the rate charged by New York City businesses, from a current 8.625 percent.

“[Wayfair] is a help for municipalities, because it represents direct money,” as opposed to revenue that has to be levied, Cameron said. But it isn’t only the loss of business that is a concern. “Mom-and-pop stores are part of the local tax base,” he said. “When they fail, the commercial tax base is stressed. When that happens, residential rates have to go up.”

Cameron added that online retailers don’t only challenge some purveyors of goods. Companies like Amazon also undercut service businesses, such as United Parcel Service and Federal Express — even the Post Office. “They’re getting clobbered,” he said.

Nassau County Executive Laura Curran said the ruling “gives a tremendous boost of confidence to local businesses that struggle to compete with Internet commerce.”

Nassau County Legislator Arnold Drucker, who attended Monday’s rally, added that a mandated online sales tax could help Nassau and Suffolk counties to fill their budget deficits.

“It would be a win-win all around. It would be a win-win for the state, for Long Island and for the community,” Drucker said. “America was built on brick-and-mortar stores. They are the middle class, and we’ve gotten away from supporting them. This could be a wake-up call to support local businesses.”

Eric Alexander, director of Vision Long Island, said, “It’s time for customers to put their resources where their heart is and invest in these businesses.”

James Gazzale, a representative for the state Department of Taxation and Finance, said last week that state officials are reviewing the Supreme Court decision.

The ruling itself is a departure from the court’s practice of the past 40 years, according to the dissent filed by Chief Justice John Roberts. Jr., who was joined by three of the court’s more liberal justices — Stephen Breyer, Elena Kagan and Sonia Sotomayor. Roberts wrote that according to the Constitution, regulating interstate commerce is more appropriately the job of the Congress, rather than the courts.

With the chief justice in dissent, Wayfair might not be the high court’s final word on the subject. “It was a split decision,” Cameron said. “They’ll probably want to revisit it at some point.”