November 25, 2016

#SmallBusinessSaturday: In New Mexico, shopping local keeps 3X more money in local economies

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Odds are you or someone you know were part of record long-lines at WalMart Thursday night or early morning sales at shopping malls and big box retailers across the state.

But don’t forget your local Main Street retailers who put more of your spending back into our local economy to power schools, public projects and charitable giving.


And shoppers who opt for the convenience of online shopping not only rob local stores of income, they cut state and local programs like education, public safety and cultural programs who depend on local sales tax for funding.  (A report published by The US Small Business Administration reported that states and cities lost $11.4 billion in local revenue due to online shopping in 2012). 

Local government in New Mexico lost at least $27 million last year alone.

Earlier this year, The Santa Fe New Mexican reported on efforts to have New Mexico join 14 other states already taxing online sales to support state and local programs — and Republican efforts to kill it.

Retail workers and business owners in places such as Las Vegas, N.M, Socorro, Taos, Deming, Portales, Clovis and Alamogordo take the losses. Internet commerce is one of the reasons unemployment rates are much higher in rural parts of New Mexico than the Rio Grande Corridor, which has a more diverse economy and is attracting some of those tech businesses…
By a 34-8 vote, lawmakers in the state Senate offered a way to level the playing field during the recent special session by including a measure to extend the state gross receipts tax to out-of-state internet sales as part of an omnibus tax bill.

Some 14 states are now collecting taxes from Amazon and other major web sellers, and more are headed in that direction as courts side with local communities trying to maintain their tax bases for vital public services such as law enforcement.

Few states need the revenue more than New Mexico, which is cutting all areas of government, including public education. And because cities and counties receive a share of the GRT, the cuts ripple down to impact city libraries, parks and police…

States are now losing $20 billion a year from the internet loophole on retail sales, according to The Wall Street Journal. Estimates in New Mexico are hard to come by, but one analysis puts the lost revenue at $27 million initially, with that set to double or triple in a few years.

“Online and mail-order retailers should collect sales tax at the point-of-purchase, so there will be a level playing field,” Jason Brewer, a spokesman for the Retail Industry Leaders Association, told The Wall Street Journal.

But the state House of Representatives [under Republican leadership] stripped out the internet tax when it amended the tax bill, sending it back to the Senate for concurrence. Any new money that could have come into the state starting in January for education, public safety and economic development will be lost, and more businesses will close because they can no longer compete with Amazon.

For Gov. Susana Martinez, a tax is a tax. 

Fighting back, small businesses around the country are teaming up to promote #SmallBusinessSaturday — a nationwide focus to promote local shopping from local and independent shops.  

In New Mexico, local spending has a much bigger impact on communities – returning at least 3 times as much revenue to our local economy as a national chain store.

Here are some highlights from Civic Economics and Albuquerque’s Independent Business Association:

A diverse group of 15 [New Mexico] retailers and 8 restaurants, all independent and locally-owned, completed the survey. 
Collectively, these retailers return a total of 39.0% of all revenue to the local economy. 


The restaurants surveyed return a total of 77.3%.
For comparison purposes, Civic Economics analyzed annual reports for four major national chain stores (Barnes & Noble, Home Depot, Office Max, and Target). 


These stores recirculate an average of 13.6% of all revenue within the local markets that host its stores. For chain restaurants, we analyzed Darden, McDonald’s, and PF Chang’s. These eateries recirculate an average of 30.4% within the local market.

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