Internet Sales Tax Could Boost State Coffers

After years of on-again-off-again debate, Congress is close to passing a bill that would require online retailers to collect sales tax. The move would end the advantage the virtual marketplace has over local bricks-and-mortar stores

New York has had such a law on the state books since 2008, but it hasn’t been fully applied – partly due to a legal challenge. James Parrott, from the non-profit Fiscal Policy Institute, says sales tax collection would be more consistent under the new federal law.

“It creates a level playing field across states, makes it easier to administer, makes it harder for online retailers to escape the taxation of their online sales,” he explained.

Parrott estimates the new law would produce $1-$2 billion of new sales tax dollars. Annually, New York State collects about $25 billion in sales tax, which is typically split 50-50 between the state and local cities and counties.