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Can You Afford an Internet Sales Tax on Your Pet Drug and Product Purchases?

Posted Aug 11 2011 10:00am
There’s a federal moratorium on taxing Internet transactions. Which means many of you typically don’t have to pay taxes on non-prescription pet products and supplies. Even drugs are exempt, giving online pharmacies a competitive advantage over most veterinary practices. But is that fair?
 

According to the American Veterinary Medical Association (AVMA), which recently adopted a policy that supports allowing states to collect sales taxes on online purchases by out-of-state customers, it’s not fair. Why tax us and not them? They already have all kinds of advantages over us when it comes to selling drugs and products — economies of scale and big-time purchasing power, for one.

They’re the big gorilla in the marketplace, says the AVMA. So why do they deserve to shirk their tax duties while small businesses suffer a loss of income?

The new policy was approved at the June 5–7 AVMA executive board meeting and reads as follows  
AVMA Policy on Internet Sales Tax: The AVMA believes that individual states should be able to collect sales taxes for goods sold over the Internet to out-of-state customers.
 
Simple enough. Read on for some clarity, according to the August 1st JAVMA News  
The AVMA State Advocacy Committee proposed the Association's new policy because the federal law puts "bricks and mortar" merchants at a competitive disadvantage compared with online retailers, who can charge less for the same products.

The committee explained in its recommendation to the Executive Board that veterinary clinics in many states selling drugs on-site must charge sales tax, while Internet pharmacies can sell the same drugs across state lines at a cheaper price because they aren't subject to the same tax requirements.

This price advantage for online retailers ranges from 4 to 9.75 percent, depending on state and local sales tax laws, according to the committee. "Veterinarians are thus becoming less able to compete with Internet pharmacies and are losing out on potential revenue," the committee wrote.

For Dr. Richard Sullivan, owner of a five-doctor small animal practice in Torrance, Calif., ending the moratorium is a matter of fairness. "It's about leveling the playing field," said Dr. Sullivan, who is also a member of the State Advocacy Committee. "I have no problems competing with any other form of veterinary medicine as long as we're on the same playing field."
 
All of which makes sense. But not because we deserve to make more on drugs, products and supplies. It’s because if the point of Internet sale tax breaks is to stimulate interest in Internet transactions because it’s a new industry we need to support, then we’ve long since reached the point where the online big-box players deserve to get off tax-free. After all, they offer you a good enough deal even without all those tax breaks.

And what’s fair’s fair.

But can you afford the hike now that you’ve come to adore your sweetheart deal?
 
 

Dr. Patty Khuly
 
 
Pic of the day: operating a computer by =.= Alex Lin

 
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