A 12/21/09 Article on Benzinga Snowstorm Drives Up Internet Sales, by N.J. Beachum, just begins to look at what may well be one of the biggest contributors to falling revenue at State and Local levels.
The article notes that the recent snowstorm created a large increase in internet sales and a decline in retail establishments.
In the Roanoke Times you will find: Virginia’s looming budget crisis, 10/21/09, by Dan B. Fleming. This article supports looking at internet sales tax as a way to curtail some of falling revenue of the State.
In the Bangor Daily News, on 12/21/09, Maine losing millions in uncollected taxes on Internet sales, by Mal Leary, shows where even with states with laws which cover some of those sales, the money was never collected. The article goes on to suggest that sales tax losses from “online sales” will continue to grow. In paragraph six, a study is cited indicating that web-based companies not collecting the tax will result in a revenue loss of $21,000,000 this year and the 2010 prediction for loss is $28,000,000.
I am not talking about a loss of sales resulting in loss of tax revenue, although that is certainly happening in this economy. I am talking about the loss of revenue from the sales that are made through the internet from companies that are not located in Virginia or in a specific jurisdiction.
Some examples to think about would be if you are making an out of state purchase, any sales tax collected (if there is any) goes to that other state. If you live in Virginia but purchase items online from a County different from the one where you live, the sales tax goes to the State with a percentage of that tax money coming back to the point where the sale was made, the other County.
Now, if you shop locally the sales tax money that is generated goes to the state with a percentage of the money coming back to the County, City and/or Town where you live.
Before you complain too loudly about possible tax increases or the reduction in services in your area, take a moment to look at where you do your shopping. If you shop locally, then good for you, you are helping your local jurisdictions and the state to provide needed services. If you are doing a lot of shopping online, you are either paying no taxes or helping other States and local jurisdictions to provide services to their citizens.
An overview of this process can be found at NOLO Legal encyclopedia.
As long ago as 7/1/05, The Washington Post, States Move Forward on Internet Sales Tax, by Brian Krebs notes that a 2004 Study by the National Governors Association and the National Conference of State Legislatures reported losses of tax revenues in the range of $15.5 to $16.1 billion dollars. (Wanna talk about a way to fund health care reform???)
Shopping locally means this money stays right here where you live! Shopping locally means that stores remain open, sales increase, order volumes increase, and prices for goods are more consumer friendly. Believe me, on a per item basis, it costs a good deal more to order 10 or 100 of something than it does 1000 of the same item. Consumers are forced to pick up the difference, or at best split that cost with the retailer in order to allow the retailer to continue to function. Shopping locally also means that local small businesses can remain in business. The big box stores have created tough competition for the smaller retailer. Add to that the ‘ease’ of online shopping and you have all but pulled the plug on small businesses. Shopping locally also means that people have more job opportunities, new small businesses have a chance to develop, tax revenues increase, services increase, and who knows, maybe even rest areas can be kept open:)
Just something to think about before you place that next online order for something that could be available right here in our area. And, if local retailers do not carry the items/brands that you want, ask them, they may be willing to get the item/brand for you. Wades Supermaket has a history of doing just exactly that…which is why I shop at Wades whenever possible.
The Virginia retail sales and use tax requires that consumers use tax is to be paid if the individual makes more than $100 in purchases during a year without paying taxes on them. How many people do you know keep track of all of their internet purchases for this? (An excellent argument for using a good CPA!) This also applies to businesses, by the way. And covers not only the Internet but mail-order catalogs and cable television shopping channels. (Since this applies only to those items purchases by Virginia residents for use in Virginia, all of those purchases which are sent to family/friends in other areas is exempt. Again raising the issue of where does the money go.)
