The shipping cost is analogus to what it would cost to go to a store and purchase/transport the item yourself. Depending on how you travel (car, bus, train) that cost can be a dollar or two, or more. Most consumers overlook this. But in fact, the shipping cost is what you will pay to avoid having to go to the store yourself. The cost of shipping is not a tax.
The merchant complaining about unfair competition is making the point that out-of-State catalog and website merchants do not have to charge sales tax, while "brick and mortar" shops do.
It seems strange to me, that if I go to the store and buy a few CDs and books I will pay a few dollars in sales tax to the State and maybe the local government.
But if I buy the same things via a website, I pay no tax. This situation forces the various merchants to compete on an uneven playing field. In effect, it is actually a subsidy for interent e-commerce.
What's so special about selling thing via a website that entitles e-commerce merchants to a special tax exemption?
People rail against "a tax on the internet" -- but the example I have given is not an "internet tax"; rather it is a sales tax which would be identical to what all other merchants pay.
Also, consider that people most likely to have computers at home and work are middle-class, upper-middle class, and rich -- and the people least likely to have access to computers are the working poor. Does it seem right that middle-class (and above) people have an opportunity to avoid sales taxes while poor people do not?
The guy sitting in an office earning the big bucks can use his computer to buy any- and everything on line (clothes, furniture, books, CDs, maybe even groceries) . . .
. . . while the guy that emptying the trash and cleaning the carpets, earning a lot less, has to go to the local stores and pay tax on his purchases.
In my opinion, that stinks! My ideal is that everyone should be treated equally and that means pay tax at the same rate regardless of method of purchase.
Of course, if you're the guy earning more and not paying taxes on all your purchases, it's easy to ignore this.