Lack Of Online Sales Tax Hurts Local Stores
Friday is Black Friday, the traditional kickoff to the holiday shopping season.
For decades, Black Friday was also a day that tipped the yearly balance sheet for many retailers into positive territory. Friday’s shopping rush will still do that for some retailers, but not for as many as it used to. Big box stores are struggling to survive as shoppers spend more of their money online and less in brick-and-mortar stores. As national chains like Sears and JC Penney struggle to hold on, it is logical to wonder if local sales tax collections will plateau and eventually drop. And, it’s only a matter of time before large decreases in property tax assessments become reality if big box buildings can’t be filled with big box tenants.
It is amidst this backdrop that the New York state Legislature chose earlier this year not to collect sales taxes on online sales. The plan would have required online marketplace providers that process a minimum of $100 million in sales a year from New York buyers to collect sales taxes on behalf of third parties from outside New York who use their platforms to sell goods to state residents. Sales taxes are already collected when a third-party seller is located in New York, but not when the seller is from outside the state.
The state Legislature’s decision is good for small online retailers and for those who make purchases over the Internet, but we don’t see how the legislature can continue with this stance as brick-and-mortar stores continue to struggle. The New York Association of Counties said earlier this year that it estimates e-commerce is growing 15 percent a year while sales in local stores is increasing around 2 percent a year.
Not collecting sales taxes isn’t the only reason people flock to online retailers instead of brick-and-mortar stores, but it surely doesn’t help. We hope the state Legislature takes another look at online sales taxes during the upcoming legislative session. It’s about time online stores have to play by some of the same rules as their brick-and-mortar competition.