A fundamental unfairness

Cyber Monday reminds us that state law gives online retailers a big price advantage over brick-and-mortar stores

First came Black Friday, then Cyber Monday. Apparently the Monday following Thanksgiving has become the busiest online shopping day of the year, just as Black Friday, the day after Thanksgiving, is reputedly the busiest shopping day for stores.

Television news shows certainly gave Cyber Monday plenty of exposure, with wall-to-wall coverage that noted that 36 percent of sales over the Thanksgiving weekend went to online retailers.

Missing from the hype was any mention of the glaring advantage online retailers have over their brick-and-mortar counterparts: They’re not required to collect sales tax, which in California means they have a built-in price advantage of anywhere from 8.25 percent to 10 percent.

Sales tax is supposed to be paid on purchases, but sellers aren’t required to collect it. Instead, customers are supposed to keep their receipts and at tax time pay whatever is owed.

Know anybody who does that? We didn’t think so.

We’re not talking chump change here. The state Board of Equalization estimates an annual revenue loss of $1.1 billion in unpaid taxes owed by online purchasers, and the amount is certain to grow significantly in coming years.

The result is that giant online retailers like Amazon and Overstock.com that provide no jobs in California are able to compete unfairly with local companies that do provide jobs, simply because the latter are required to collect and pass along the sales taxes that pay for the governmental services and infrastructure improvements we need. At a time when the state is floundering financially because of a lack of revenues, it makes no sense to allow this fundamental unfairness to continue.