CYCLOPS: Court’s online tax ruling is welcome

The opinions stated in this article are solely those of the author and not of The Davis Clipper. For Father’s Day I received a music CD. It was purchased online since the artist’s music is not available in Utah music shops. My wife didn’t notice (and didn’t care) if the price included sales tax. For my birthday, my son gave me wooden coasters etched with baseballs, a tribute to our annual Major League baseball vacations. I asked him if he paid sales tax on this online purchase. He had no idea; he just knew he couldn’t find such an item at a retail store. I purchased a novel for my daughter. The book, written by a little-known first-published author, was not in stock at any Salt Lake area bookstore, so I bought it from an online bookseller in New York. Did I pay sales tax? I couldn’t tell you. In its infancy, online sales were lifted by the absence of sales tax. Most people figured the item, even if it were available at a local store, would be less expensive even if they paid sales tax on it from a local merchant. The world changed significantly since then. Online sales continue to grow, but the sales tax omission is not a main driver. People buy online for convenience (24-hour shopping, no driving to stores) and for unique products (Etsy crafts, hard-to-find books, and clothing). Want to get people excited? Just mention “Amazon Prime.” As we all know, online sales have taken a deep bite out of brick-and-mortar stores. This has not only hurt commercial property values (thereby decreasing city-county property tax collections) but it has eroded sales tax collections which help pay for police, fire, road maintenance, etc. Since Amazon voluntarily began collecting sales tax and remitting it to Utah, the State has seen about $32 million and city-county governments have received some $14 million. The next time you visit a new city park, you might thank Amazon for “purchasing” some of the sprinklers and the teeter-totter. But the majority of online sellers are not collecting or remitting sales taxes. That might (and should) change with the June opinion of the U.S. Supreme Court ruling that states have the right to require out-of-state online sellers to collect the tax and remit it to the state coffers. Home-based craft sellers have complained that figuring out the different tax amounts nationwide would be an undue burden. However, computerized systems are available to handle that tax, and most “small” craft sellers aren’t selling many thousands of items each year. The addition of the tax will also not decrease sales, especially for one-of-a-kind items created by small home-based artists and crafters. If the Utah Legislature acts to require sellers to collect the tax, Utah could gain some $285 million – money for education, highways, child services, and law enforcement programs. That $1.16 sales tax I paid to buy my daughter a new novel will go to a beneficial public purpose. We’ve gone from the “Age of Enlightenment” to the “World of Amazon.” And while I’ll continue to make the vast majority of purchases at locally-owned stores, I’m glad the Supreme Court has caught up with the future and embraced reality. Our communities will benefit.


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