With no conclusive proof, JC Penny, Best Buy, Home Depot and a variety of other American stores, (who call themselves the Alliance for Main Street Fairness) claim that tax loopholes that Amazon once took advantage of, which allowed American citizens in certain states to purchase online goods without paying tax at their point of purchase will be also used by Alibaba.
Citizens in states such as California were previously exempt from paying tax at their point of online purchase when buying from stores such as Amazon. While they were required by law to file these purchases with their tax returns, the enforcement of this law was lackluster, to the benefit of consumers. It is yet to be known if Alliance for main Street’s propaganda will catch flame but this correlates with the equally unsubstantiated propaganda that “China is taking over the world”, making it quite likely.
Alibaba on the other hand is adamant that that they operate like any other retailer by paying their taxes and states that the advertisement “is not fact-based”.Playing the devil’s advocate: If Alibaba were to be exempt from sales tax, there is research that may substantiate the fears of local retailers.
According to the National Bureau of Economic Research, net online sales in California dropped by nearly 15% when Amazon began collecting sales tax at the point of online purchase instead of “trusting” citizens to file these online purchases when submitting their tax returns.
Ultimately, what may or may not occur regarding the tax related operations of Alibaba are nothing more than hearsay until there is concrete evidence to back this up. What is more alarming is that an unsubstantiated claim like that created by the Alliance for Main Street Fairness can be flighted on national television and radio.