THE ISSUE: Online retailers and sales taxes; OUR OPINION: Present exemption for big Internet merchants unfair to other businesses

South Carolina lawmakers reversed course in 2011 and decided to give Amazon.com the exemption on collecting state sales taxes the company was seeking to locate a 1,200-job facility in Lexington County. Proponents of the exemption said it had to be granted to land a project that could eventually provide as many as 3,000 jobs and pump an estimated $61 million annually into the state's economy.

Not to be ignored are the incentives Amazon was provided other than the sales tax break: $4 million in free land, a $3,200 state tax credit for every worker hired, reduced property tax and no corporate income tax.

We have joined opponents of the tax break in citing the unfair edge it gives Amazon over its retail competitors. Of the top 10 retailers doing business online - a list that includes Walmart Stores Inc., Staples Inc., Dell Inc. and Apple Inc. - only Amazon does not routinely collect sales taxes. And what about all the other businesses from big to small that collect sales taxes vital to keeping state government operating?

The issue is not unique to South Carolina. Other states have begun to change course on tax breaks for online businesses, with firms including Amazon now looking for some consistency. In a nutshell, the exemptions simply have to go. It is just a matter of how.

Enter the federal government with a proposal titled the Marketplace Fairness Act.

A group of South Carolina small business owners traveled to Washington this past week to meet with members of the South Carolina congressional delegation and join Sens. Lamar Alexander, Mike Enzi and Dick Durbin for a press conference showcasing the recently introduced legislation in the Senate.

The Marketplace Fairness Act would level the playing field between online-only and brick-and-mortar retailers. Currently, Internet retailers use a loophole in the law that allows them to forgo collecting state sales taxes unless a business has a physical presence in a state. South Carolina's exemption for Amazon was required because it is building a physical presence in the form of a distribution center.

The Marketplace Fairness Act would give states the ability to enforce their own tax laws and ensure the government isn't picking winners and losers in the marketplace. The legislation is sensible. It establishes tax equity and requires all businesses to operate under the same rules. And it doesn't place a huge burden on online businesses by forcing them to keep up with state, county and local sales tax rates. The bill gives states a choice of simplifying their tax code for online merchants, accepting a set minimum online sales tax or keeping their system as it is. Businesses with less than $500,000 in annual sales would be exempt from sales taxes completely.

Congress allowed online merchants to avoid state sales tax for years because it didn't want to stifle the growth of Internet-based businesses. Those retailers are now giants in no need of protection.

As the Herald-Journal of Spartanburg states: "It's time for them to collect and pay the taxes that other retailers do. It's time for them to give up the unfair advantage they have over the local stores that employ our neighbors and contribute to funding our roads and schools."