Some of the folks in the US most opposed to taxing online purchases are reversing their position in the wake of budget deficits.
State governors who have so far refused to tax online purchases are reversing their positions in order to collect more revenue. State sales taxes in the US vary from state to state, ranging from zero in New Hampshire to more than 8 percent in New York. Some states don't tax food and clothing, others tax everything.
According to the Wall Street Journal, Republican governors — who typically frown on raising taxes — are joining their Democratic compatriots in favor of taxing sales from retailers such as Amazon.
Currently, sales taxes are collected from online retailers that maintain a physical presence in the customer's state. If Amazon.com doesn't have a warehouse facility in your state, chances are you don't pay sales tax on your Amazon purchases.
Taxing online purchases could be a boon to brick-and-mortar retailers, such as Best Buy, which are suffering from a practice called showrooming. (See: When in Doubt, Redesign.) Shoppers will go into retail stores to test drive potential purchases, then buy online. In some cases, online purchases will save buyers sales tax. In other cases, online retailers offer lower prices because of low overhead and economies of scale.
I think this shift will change buying habits, but not in the way it's intended. Customers will purchase items and they will pay sales tax — that seems inevitable. What they might balk at is shipping. In a typical online purchase, buyers will get a subtotal, tax, then several shipping options. Some retailers offer free shipping at times of the year or with a certain level of purchases. When the shipping balance is zero, a sales tax doesn't look so bad on the total.
However, I've seen shipping costs equal to or above the price tag of the item. I might pay the tax with free shipping or I might pay for the shipping if I don't pay a tax. But for those of us unaccustomed to both, driving over to the retail store might look like the better option. Ordering in bulk is also a possibility — you pay one shipping fee for more products — but as we've seen in electronics, such incentives sometimes lead to overbuying and excess inventory.
Do you think online taxes will change buying habits? How about those of you outside the US — I'd be interested in hearing how tax laws work (or don't work) from your perspective.