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BILL CRAWFORD: Stores closed by online competition impact community finances

BILL CRAWFORD

J.C. Penney announced it will close five stores in Mississippi communities – Columbus, Corinth, Greenville, Meridian, and Oxford. Earlier Sears announced three closures in Columbus, Jackson, and McComb, with more to come. Even Wal-Mart has closed stores, in Belmont, Mantachie, Sardis, Walnut, Derma and Nettleton. 

 
Two years ago Radio Shack closed 20 stores in Mississippi, in Jackson, Hattiesburg, Meridian, Cleveland, Biloxi, Gulfport, Ocean Springs, Waveland, Vicksburg, Tupelo, West Point, Grenada, Greenville, Corinth, Greenwood, Laurel and Natchez.
 
“Brick-and-mortar stores are suffering due to competition from online sales, and the closures just keeping coming,” reads a March headline at TheMotleyFool.com. “Last year took a devastating toll on the retail industry, and the carnage will continue in 2017,” the story reported. “A number of chains will likely not survive the year, and many that do will finish 2017 smaller than before.”
 
“Sporting goods stores are down for the count,” begins a story in USA Today. “The scourge of insolvency is sweeping through the sector as online sellers gain the upper hand over yet another corner of retail just recently dominated by big-box chains, specialty stores and mom-and-pop shops.”
 
As if individual store closings aren’t enough, “Store closures will push 30% of US malls to the brink of death,” Business Insider reported. “Since the start of the year, more than 1,500 store closures have been announced by retailers including JCPenney, Macy’s, Sears, American Apparel, The Limited, and Abercrombie & Fitch. Most of the closures will happen over the next several months.
 
Guess what all these brick-and-mortar Mississippi stores have in common?  They all charge and collect sales taxes. While their closing reduces state sales tax collections, it really impacts tax revenues in affected municipalities…especially when you add in lost property taxes.
 
Local communities could at least recoup taxes lost to Internet sales if the state collected taxes on sales from online vendors and shared them with communities. They do in Alabama.

Alabama passed a bill to collect taxes on online sales in 2015. It provides strong incentives for online vendors to voluntarily collect taxes. Today, 85 retailers with no stores or physical presence in Alabama have signed up for the “Simplified Sellers Use Tax” program, according to AL.com.

As this session of the Legislature winds down, Mississippi communities still can’t count on any similar legislation to help them out. 

But, mayors in communities affected by stores closings shouldn’t worry, because their legislators clearly don’t… at least that’s what many mayors have come to believe. “They don’t (unprintable language),” said one. 
 
Not only do legislators not pass most revenue proposals mayors request, they continue to make decisions that push costs down to the local level. 
 
“I am not sure anyone in the legislature understands the feelings of numerous mayors and supervisors as to concerns facing them on a daily basis,” said another mayor.
 
Online sales driving brick-and-mortar stores out of business is just  one of several systemic changes impacting community finances. 
The number of perturbed mayors and other local officials mounts. Will they finally get legislators’ attention? Or will it take election challenges?
  
 
» Bill Crawford is a syndicated columnist from Meridian (crawfolk@gmail.com)

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2 comments

  1. It’s not sales tax or lack of sales tax that attracts customers to the internet. Further, it’s not legislators’ responsibility to make mayors and supervisors happy.

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