Monday, January 05, 2009
Collecting tax remains a burden
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Susan A. Simmons
Simmons, of Roanoke is the owner of Merle Norman Westlake.
Re: "Dealer discount outlived its purpose," Dec. 26 editorial, which states: "The burden of collecting the sales tax is no longer so arduous that retailers deserve a cut of the action."
This statement appalls most of us in the retail business. The Roanoke Times, Gov. Tim Kaine and the general public clearly need to be enlightened on this subject.
Many things have changed since 1966, when Virginia instituted a sales tax, thus requiring retailers to comply with collection and accounting for this process. The "dealer discount" of 2 to 4 percent of the amount of tax collected is minuscule compensation for the time and expense of setting cash registers to differentiate between food, drugs, services and regular retail items.
Anyone who believes this process is "minimal" has obviously never owned a retail operation or participated in the "sales tax holiday."
The expense to the retailer for sales tax collections has actually increased overall as customers' use of debit and credit cards has increased to 95 percent or more of total sales for many businesses. Cash is seldom used at most upscale retail businesses.
All debit and credit cards charge the retailer between 2 and 5 percent to run the purchase for payment through the credit/debit card process. This, of course, includes the sales tax portion of the cost of the item purchased. Credit cards that offer rebates or other incentives to the consumer are often double the standard rate to the retailer.
For example, you purchase a coat with a $100 price tag. The sales tax is 5 percent ($5) and the total is $105. You pay with your "card that pays you back" credit card, and the charge to the retailer is around 3 percent of the total charge, or $3.15. Without the dealer discount to the retailer, the store is losing 3 percent of the amount of the sales tax collected just for doing its job.
This seemingly insignificant amount adds up during the course of operation and is due to the commonwealth on the 20th of every month.
This is also my main contention as to the fairness of the so-called Fair Tax. The retailer would be stuck collecting a 20 to 25 percent national sales tax and having to pay the credit/debit card company in order to comply with collection. No one would be left in retail except Wal-Mart; however, that is a story for another day.
