Posted by: Ann Treacy | January 13, 2013

Experiment on online tax benefits those without tax

Before Christmas I wrote about the Marketplace Fairness Act, an effort to tax online purchases. A few states started charging tax in 2012 – most notably California. So folks were looking at the 2012 holiday shopping season as a pilot test on the impact of tax on online purchasing. Best Buy has reported that the online tax has been good for them in areas where Amazon charges tax and they don’t…

“In California, Texas and Pennsylvania where Amazon.com recently started collecting tax, it is very early, but Best Buy has seen a 4 to 6 percent increase in online sales observed in aggregate versus the rest of the chain,” spokeswoman Amy von Walter wrote in an email to Reuters.

Amazon, the world’s biggest Internet retailer, began collecting sales tax in California on September 15, weeks before the start of the crucial fourth-quarter holiday season. In the weeks leading up to the move, there were reports of binge buying of higher-priced items such flat-screen TVs by some California shoppers.

Amazon started collecting state sales tax in Texas in July and in Pennsylvania in September. …

Big retailers hope the requirement to collect sales tax will reduce Amazon’s price advantage and help them recoup some sales that lost to the Internet retailer.

Best Buy also saw an increase of 6 percent to 9 percent in online orders that are picked up in its stores in those three states compared with the rest of its chain, von Walter said.

Not conclusive but sort or surprised me. On the one hand, it’s again leveling the playing field between online and offline shop owners. Although I know folks who come to Minnesota to avoid paying taxes on clothes; I guess this isn’t much different. It will be interesting to see what others report.


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