NORFOLK – For local businesses like Renegade Work and Western Wear in Norfolk, the cost of doing business can be high.
“We have several different layers of payroll tax,” says Renegade CEO and President Troy Weyrich. “We have property taxes. We have recycling taxes. We have a wide array of taxes that we do collect, including sales tax.”
Weyrich says not all those costs are shared by their online competition. Let’s say you want to buy a cowboy hat. You could go to Renegade in Norfolk to see their selection…or you can buy one online. That online retailer is exempt from collecting sales taxes if they don’t have a brick-and-mortar presence in Nebraska. Instead, you’re supposed to report those purchases on your income taxes each year. Not a lot of people do, and business owners say that means a lot of lost revenue. The National Conference of State Legislatures estimated that in 2012, Nebraska lost over $118 million in revenue due to uncollected sales tax of online purchases. Ron Deets, owner of Deets Home Store in Norfolk, says that creates a chain reaction.
“Not only do we use the revenue, but the retailer loses income, so his company pays less income tax,” Deets said. “He may have to lay someone off, which lowers income. The owner himself, if he takes a salary, takes less or has less income tax exposure. Ultimately if the business goes away, then there could be an empty building.”
This past week, the Nebraska Unicameral gave first round approval to LB 44, which would require online businesses that do $100,000 worth business annually to collect sales tax in Nebraska, whether they have a presence in the state or not. The bill faces an uphill climb, though. Governor Pete Ricketts has threatened to veto the bill, on the grounds that it may be unconstitutional. But business owners say it’s a fight worth taking up.
“Other states around us are doing it,” Deets said. “South Dakota’s governor is 100% behind it. I would urge Gov. Ricketts to take the leap.”
LB 44 has been placed up for a second round of debate in the Unicameral. In the meantime, local businesses say they’ll keep trying to stay caught up with the competition.
“We’re involved in a lot of things that help make this area a great place to live,” Weyrich said. “That’s part of the key as well. Those online providers are involved in almost none of that kind of thing.”