The locals still have benefits: face to face interaction instead of fixing problems over the phone (this includes knowing each other by name, as opposed to being customer #007837678 or somesuch), getting something right now for the cost of gasoline and your time (instead of paying out the nose (or elsewhere) for next-day shipping), no “oops, we lost your package” nightmares. I usually buy local because I don’t like waiting on a delivery; I’m impatient, always have been (working on it). It’s funny, too. I’m 25 so you’d figure I’d be this tech-savvy little kid permanently attached to a computer to order goods. I hate ordering stuff online, I’d rather pay in cash locally. It’s like I was possessed by the soul of some crotchety 70-year old retiree that hates “all this blinkin’ flashin’ newfangled electronic crap.”
WHen I’m saving 62% over the retail price, even with shipping included, I can deal with being customer #007837678.
What's not fair is unequal tax treatment. If you can't do away with taxes altogether; at least apply them fairly. Fair doesn't necessarily mean “the same” — as KarlInOhio pointed out, the services received should also be considered.