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There's a new tax in town – online sales



October 24, 2012
For all the hubbub over new taxes lately, thanks partially to our Tea Party friends, I'm surprised a new tax slipped through unnoticed.

This one has the potential of bringing in millions for Georgia and could affect shopping habits for millions of people.

I'm talking about an 8 percent online sales tax.

Georgia is often cited as being toward the bottom of many lists that rank our states. In this recent case, Georgia is now near the top – No. 10, in fact.

Georgia is the 10th state to add a sales tax onto online sales.

Whenever shoppers buy from sites such as Amazon or Overstock, those prices – often competitive with local retailers' prices – are given without any local sales tax included.

It's a problem with the state tax code not keeping up with the digital age. If a business does not have any physical presence in a state, they have not had to pay sales tax for orders from that state. With online shopping, that's great for the online retailers who can offer cheaper rates than local vendors, but horrible for in-state businesses, from the mom-and-pop stores down the street to corporate behemoths like Home Depot who are required to pay those taxes. Our local stores are at a competitive disadvantage.

It's also bad for the state, which needs that revenue. Projections place the new income at about $18 million in sales.

Bloomberg business reports have suggested an estimated $20 billion in sales taxes go uncollected every year nationally.

With online sales growing by leaps and bounds every year, it's reasonable that the cash-strapped states want to collect their piece of the pie. In states such as Florida, with no income tax, they rely solely on sales taxes for their budgets, and that $20 billion looks very tempting.

It's not just a Georgian issue. Kansas, Kentucky, New York, North Dakota, Texas and Washington have already passed similar laws. Another 10 are expecting to collect sales tax. Some retailers such as Amazon are pushing for a federal law governing it, for a uniform tax across the country. It's because there is no federal sales tax that states have to enact their own. That's a slippery slope of another kind.

However you slice the pie, the consumer is ultimately at a loss. Either way, we will pay more for the goods we consume.

But will it be enough to change shopping habits? Will that 8 percent force enough shoppers into the store instead of onto the computer? If that $100 deluxe DVD set is suddenly $108, will that be enough for Georgians to instead hit their local video store?

It's doubtful there will be a huge swing back toward the shopfront, but surely some will, especially at first.

I'm interested in what our readers think. Will you rethink online shopping if it now includes a sales tax? Email me your letters at jcopsey@northfulton.com.

Editor, Milton Herald
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Tags: Business News, Government & News & Crime

  1. report print email
    Mostly fair...
    October 25, 2012 | 11:10 AM

    I think this was driven more by the bricks & mortar business interests than the politicians. I see other factors too.

    In some cases, portions of sales tax don't represent funding of the infrastructure used to promote business. I would be in favor of a lower sales tax for online transactions.

    Also, products that are commoditized are easier to deliver cheaply by an online vendor that operates from cheap space. In those factors, the retails will continue to be at a disadvantage. Look at what is happening to retail electronics.

    Why should I go to a retailer for my MP3 player if they will not give me better support after the purchase than the online vendor?

    Bricks & mortar business will have to work harder to understand the most profitable "mix" of goods to keep people coming in.

    They will also need to add value by maintaining a useful relationship with their clients, beyond the moment when they hand them a register receipt.

    Jolly
    Cumming
  2. report print email
    Mostly fair...
    October 25, 2012 | 11:10 AM

    I think this was driven more by the bricks & mortar business interests than the politicians. I see other factors too.

    In some cases, portions of sales tax don't represent funding of the infrastructure used to promote business. I would be in favor of a lower sales tax for online transactions.

    Also, products that are commoditized are easier to deliver cheaply by an online vendor that operates from cheap space. In those factors, the retails will continue to be at a disadvantage. Look at what is happening to retail electronics.

    Why should I go to a retailer for my MP3 player if they will not give me better support after the purchase than the online vendor?

    Bricks & mortar business will have to work harder to understand the most profitable "mix" of goods to keep people coming in.

    They will also need to add value by maintaining a useful relationship with their clients, beyond the moment when they hand them a register receipt.

    Jolly
    Cumming
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