With retail stores struggling across the country, online shopping has taken over in recent years, but the major online retailers did not have to pay a tax in states where they didn’t have a physical location, but that is about to change.
A 5-4 ruling by the U.S. Supreme Court has given states to the ability to collect sales tax on certain out-of-state internet purchases, calling the current laws “unsound and incorrect.” In the court’s decision, Justice Anthony Kennedy wrote that the time has come to level the playing field.
“[The current rule] allows remote sellers to escape an obligation to remit a lawful state tax is unfair and unjust,” added Kennedy. “It is unfair and unjust to those competitors, both local and out of state, who must remit the tax; to the consumers who pay the tax; and to the states that seek fair enforcement of the sales tax.”
According to Fox News, e-commerce now makes up about 10 percent of U.S. retail sales. In a statement, Attorney General Jim Hood, a strong supporter of the internet tax, said that Mississippi will soon see the benefits of the tax.
“I have supported an internet sales tax from the beginning, not only because it will bring an estimated $50 million in the first year for our state, but because this means our local brick and mortar stores are now on a level playing field with businesses that have no storefront in Mississippi. Before Amazon and others started paying voluntarily, the estimated internet sales tax collection for Mississippi was $134 million. Sales taxes from internet purchases from companies without in-state stores were already owed. It was just a matter of who collected it,” Hood said.
He went on to say that online retailers have had a dramatic effect on local businesses and the state’s economy. Hood also said that funds brought in from the internet sales tax will provide a new revenue stream to support the state in areas of need, such as education and infrastructure.
“We live in a digital age, and our laws must reflect that,” Hood said. “Online shopping may be convenient, but it’s had a negative impact on our Main Street merchants who have always been required to charge a sales tax. When our local businesses suffer, so do we. Now, there’s no difference in someone walking into a store to buy shoes and sitting on their coach and doing the same thing from their phone. Today’s ruling makes it a fairer market and creates an opportunity for our cash-strapped state to bring in a new revenue stream to fix our deteriorating roads and bridges and fund our children’s education.”
According to Fox News, Amazon is not a party to the case, since it now has a physical presence in many states, with warehouses, and pays the taxes.