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Ms. HIRONO. Madam President, I join my colleague Senator Reed of Rhode Island and I thank Senators Enzi and Durbin for their hard work on S. 743.
I rise to speak in favor of the Marketplace Fairness Act. This legislation will put businesses in Hawaii on an even playing field with their out-of-State competitors. It does this by giving the States--not the Federal Government, the States--the authority to require out-of-State merchants to collect the same taxes local merchants have to collect when they sell goods to customers in Hawaii. This is only fair.
I want to be clear about what this bill does and what it does not do because there is some confusion about what this bill does and doesn't do. For example, this bill does not impose a new Federal sales tax. This bill does not require the States to do anything. In fact, if this bill becomes law, nothing would change unless a State passes its own legislation.
What this bill does do is to give States that choice. It lets each State choose whether to level the playing field for its local businesses. In addition, this legislation provides a framework that ensures States can exercise this authority in a way that ensures fairness for businesses of all sizes.
For example, it requires any State that chooses to exercise this new authority to streamline its sales and use taxes, and to provide free software to calculate these taxes to out-of-State sellers. This does not impose any kind of burden on these out-of-State sellers who are selling items to people in States such as Hawaii. This legislation protects small online businesses by exempting any business with less than $1 million of annual sales.
The growth of the Internet has been one of the most significant drivers of innovation in our country's history. More and more Americans rely on the Internet to run their small businesses, access educational and health resources, keep in touch with loved ones, and for entertainment. Expanding fast, affordable, and secure Internet access is an essential building block for a strong 21st century economy.
However, we must be careful to ensure that while we are promoting the economic potential of the Internet, we are also being fair to local businesses and entrepreneurs. These are the businesses that populate the Main Streets of towns all across the country, across all the islands in the Hawaiian chain. These are hardware stores, clothing stores, gift shops, and many others--many of which are small businesses. These are businesses that create jobs, pay taxes, and provide needed goods and services in our communities. In fact, in Hawaii, retail businesses employ nearly 25 percent of the workforce, about 128,000 people. In 2012, these businesses in Hawaii generated $30 billion in sales as well as $1.2 billion in tax revenue. Many of these entrepreneurs do not want to just contribute economically, they want to contribute and do contribute to the culture and character of their communities.
For example, my office received a call from the owner of Kona Stories, a small bookstore in Kailua-Kona, HI. Kona Stories opened in 2006 and sells over 10,000 titles of all kinds. But Kona Stories doesn't just sell books, it hosts book clubs, supports local authors and artists, and it also helps promote other local businesses. The programs and meetings Kona Stories hosts focus on promoting the local culture and character of the community. Small shops like these are places that can teach visitors about the unique characteristics of our communities. They also help bring local people closer together around shared experiences and values.
Unfortunately, these small businesses are the ones that are hurt most by the advantage online merchants currently have, because they do not collect Hawaii sales and use taxes. This makes online products appear cheaper because their prices do not include State taxes, even though these taxes are technically still owed. That is not real competition, it is an artificial discount that is unfair to local brick-and-mortar businesses and it puts businesses in Hawaii, such as Kona Stories, at a disadvantage. As small businesses, they have a hard enough time competing with the online giants that can offer lower prices even if they were collecting State taxes.
In addition to allowing States to level the playing field for their local businesses, this bill would also provide a boost for State and local government by letting them collect the taxes that are already owed. According to a 2012 Hawaii Tax Review Commission report, fixing the situation and giving States such as Hawaii that option to enact necessary legislation would mean nearly $160 million in additional revenue for the State of Hawaii in 2013.
I want to be clear. That money does not come from new taxes. It comes from taxes that are already owed, that are not paid. That is money that should be going to keep teachers in the classroom, firefighters and cops on the beat, and fixing our roads and bridges so we all benefit.
Overall, the Marketplace Fairness Act is a good bill whose time has come. It balances the need to preserve a vibrant and innovative online marketplace with a need to ensure fairness for local businesses.
It also ensures that everyone is meeting their responsibilities with regard to paying State and local taxes.
That is why this legislation has such a broad range of support from business, government, labor organizations, big and small, from all across the country. In fact, my home State of Hawaii has been working to try to address this issue on the State level for years. We need this Federal legislation. Passage of this bill will finally give Hawaii the ability to address this disparity and put our businesses on an even playing field. That will be especially important to the 2,000 local businesses that make up the retail merchants of Hawaii.
Madam President, I ask unanimous consent that a list of Hawaii national supporters be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
SUPPORTERS OF S. 743, THE MARKETPLACE FAIRNESS ACT
Retail Merchants of Hawaii, National Association of Counties, National League of Cities, U.S. Conference of Mayors, Government Finance Officers Association, National Council of State Legislatures, Bipartisan Policy Center's Governors Council, AFL-CIO, AFSCME, American Federation of Teachers, National Education Association, American Federation of Government Employees, International Association of Fire Fighters, International Federation of Professional Technical Engineers, International Union of Police Associations, Service Employees International Union, UAW, American Apparel & Footwear Association, Food Marketing Institute, Consumer Electronics Association.
Ms. HIRONO. I hope my colleagues will join me in supporting this important legislation.
I yield the floor and note the absence of a quorum.