New online sales tax hurts students

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For many students this semester, purchasing textbooks was as disheartening and shocking as setting money ablaze. Each semester brings renewed sticker shock to even the most seasoned university students. With many courses demanding a new edition or a veritable library of supplemental materials, it’s no wonder that many students use Internet e-commerce sites to purchase class materials. Studies have found that college-goers purchase 30 percent of their textbooks from an online source. Students often cite the significantly lower cost of the books as the reason for the switch from the traditional textbook market: local brick-and-mortar stores.

Thanks to legislation passed earlier this year, by the time the spring semester begins, every online retailer with any kind of physical presence in Texas will be forced to collect sales tax from Texans making purchases online. Unfortunately for cash-poor college students, this means that textbooks from some sites such as Amazon.com will have higher costs. For students at every university in the state, the local bookstore may begin to look preferable when faced with Texas’ 8.25-percent sales tax on orders that can easily exceed $500. Brick-and-mortar businesses faced with overwhelming competition, combined with this session’s unprecedented tight budget clearly pressured lawmakers to make such a misguided decision.

While lawmakers tout this instance of tax reform as a victory for Texas’ economy, its detractors point to additional negative effects of the bill. Some bring up the hypocritical role played by big-box stores, such as Home Depot, Wal-Mart and Best Buy — companies that are more known for their annihilation of smaller stores than vice versa — in passing the new law. These large stores should be searching for other ways to compete than lobbying for tax increases on their competition.

In a mind-boggling move earlier this year, Texas Comptroller Susan Combs notified Amazon that it owes more than $250 million in back pay — prompting the online retailer to close its large Irving distribution center and lay off more than 100 Texas employees. While lobbying firms such as the Alliance for Main Street Fairness plug how the bill “creates jobs for Texans” by allowing more equitable competition with online retailers, analysts are crying foul. Creating a hostile business environment is not generally associated with Texas, and many companies are lured to Texas in large part because of its low taxes. Economic analysts at the prestigious firm William Blair have forecasted that Amazon will “outperform” traditional competitors Wal-Mart and Target. Is it wise to discourage business from a powerful retailer that will continue to expand? In doing so, Texas sacrifices job creation for years to come.

Underlying the issue is the growing power of big business to dictate the directions of lawmakers — regardless of the long-term effects for Texans. The losers in the aftermath are ultimately consumers and job seekers, while traditional stores will walk away at worst unscathed and at best raking in additional profits. As for students? Start saving now — prices aren’t going anywhere but up.


Katsounas is a business and government sophomore.