Amazon’s Holiday App Proves Urgent Need for Congressional Action to Level Playing Field 

The Retail Industry Leaders Association (RILA) reacted to a new smartphone App from Amazon.com that encourages holiday shoppers to use brick and mortar stores as showrooms to then purchase merchandise online from inside the store.   Central to this tactic is Amazon’s continued practice of using a pre-internet loophole to avoid state sales tax collection, a move that gives them an unfair competitive advantage over Main Street retailers. 

“Retailers compete on price 365 days a year, and at no time is that competition hotter than during the make-or-break holiday shopping season.  However, by continuing to evade collecting state sales taxes, Amazon’s exploitation of a pre-Internet tax loophole is resulting in a 6-10 percent perceived price advantage over their competitors on Main Street,” said Katherine Lugar, executive vice president of public affairs.

“Amazon’s aggressive promotion of its Price Check App shows the lengths they are willing to go to exploit this tax loophole, and is a stark reminder of why Congress needs to act to protect retailers on Main Street.  A failure to act is an implicit endorsement of a subsidy of Amazon, a subsidy that distorts the free market and puts jobs on Main Street at risk,” said Lugar.

RILA supports bipartisan legislation introduced in the House and in the Senate that would level the playing field and force all retailers to compete under the same rules. In a hearing last week before the House Judiciary Committee, Congressman Mike Pence (R-IN) summed up the need for Congressional action by saying: 

“I don’t think Congress should be in the business of picking winners and losers. Inaction by Congress today results in a system today that does pick winners and losers.”   

Gruenwald, Juliana, “Congress Urged to Close Online Sales-Tax Loophole,” National Journal, 11/30/11

“Main Street retailers have been forced to compete on an uneven playing field for too long. Retailers cannot afford another holiday season where they are forced to compete on an uneven playing field,” added Lugar.

Retail Industry Leaders Association (RILA) is a trade association of the largest and most successful companies in the retail industry.  Its member companies include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales. RILA members operate more than 100,000 stores, manufacturing facilities and distribution centers, have facilities in all 50 states, and provide millions of jobs domestically and worldwide.

###