Collecting online sales tax may benefit communities

The Congress is considering legislation imposing local sales taxes on online purchases. Since this is effectively money out of consumers’ pockets, how will this impact the economy?     

The impact on the economy should be minimal, as it is unlikely online retailers will be able to blithely pass through the entire amount of the tax. In other words, online retailers will likely have to drop their prices or cut what they charge for shipping and handling. Basically, the consumer isn’t going to eat it as much as you would think.

Why? Well, one of the primary advantages an online retailer has over a traditional one is the lack of sales tax. Oh sure, there might be some laws on the books requiring people and/or online firms to pay the applicable tax; however, most experts and analysts agree enforcement is lax, at best.

Read the full article as previously published in the Montgomery Advertiser April 26 2013.

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.