Local owner says online sales tax bad for business and Oregon

PORTLAND, Ore. - Some Oregon online retailers could be forced to follow thousands of sales tax laws outside state lines if a bill in Congress becomes law.

It won't affect consumers who shop online in Oregon.

But Aaron Fabbri, who owns Home Brew Exchange, believes the true cost to him is collecting money that won't help improve Oregonians' lives.

Beer is a budding business in the Northwest and Fabbri says home brewing is now part of Portland's culture.

"Before, we had a tiny shop up in Kenton, and we had the problem that we didn't have enough space," he said. "And now we finally found a larger building, and now we have the challenge of we need to grow into the space."

He knows that means growing his customer base outside of Oregon.

"To be able to afford the rent, we have to be doing a significant amount of sales online," he said.

So far Fabbri says he's spent more than $4,000 setting up an online shop for his Home Brew Exchange, which didn't include the cost for the website.

That number could go up if Congress passes the proposed bill that would allow states to collect sales taxes from all Internet sales even out of state.

But Fabbri says that could gag his growth.

"How do we have procedures in place to sell to any of the 50 states? And then what is our software going to be able to do," he said.

Supporters say the bill makes it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send it to individual counties or cities.

Right now, Fabbri's business would be exempt from collecting taxes on Internet sales from his online customers since his revenue from those sales is less than $1 million. But he expects that to change in the future.

"Local businesses, such as ourselves, are going to have to be paying other state's sales taxes," he said.

He also points out that it's a money source Salem won't see.

"Any pain that Oregon's feeling for not having a sales tax currently is only going to be amplified considering that more and more commerce is moving online," he said.

Supporters say it's a matter of fairness.

Big retailers with stores all over the country like Wal-Mart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don't have to collect sales taxes, except in states where they have offices or distribution centers.

As a result, many online sales are tax-free, giving Internet retailers an advantage over brick-and-mortar stores.

Internet giant eBay is leading the fight against the bill, along with lawmakers from states with no sales tax and several prominent anti-tax groups.

In the Senate, lawmakers from three states without sales taxes are leading the opposition: Montana, New Hampshire and Oregon. They argue that businesses based in their states should not have to collect taxes for other states.

Thus, Oregon's Democratic Sens. Jeff Merkley and Ron Wyden voted against the bill on Monday. But Washington's Democratic Sens. Patty Murray and Maria Cantwell voted for it.

The state of Washington does have a sales tax.

In the House, the bill faces an uphill battle. Many representatives see it as a tax increase.

It is unclear when the House will vote.

The Associated Press contributed to this report.