Sales tax revenue
Massachusetts is joining a growing list of states that will be able to tap into a significant new source of revenue.
Recently, it was announced that online giant Amazon.com had reached a deal to begin collecting the state’s 6.25 percent sales tax when customers here buy things through its website.
As with other states that have worked out such deals, it’s seen as providing the so-called “brick-and-mortar” retail businesses in the state with equal footing regarding competition. Since Amazon had not been collecting the state sale’s tax, local businesses across Massachusetts had seen themselves as being at an automatic disadvantage.
“It’s a very big win for Main Street, said Jon Hurst, president of the Retailers of Association of Massachusetts. “Small merchants will compete price-wise and service-wise. What they cannot accept is a government-imposed advantage.”
It’s not just the local businesses that come out a winner here. The company, which has an office in Cambridge and acquired Massachusetts-based Kiva Systems Inc., a robotics company, earlier this year, is planning to enlarge its presence in the commonwealth, with a plan to add “... hundreds of high-tech jobs.”
This also means more tax revenue to the state, where the sales tax is expected to generate tens of millions of dollars on an annual basis.
“It’s not going to solve all of our revenue challenges but it certainly will help,” said state Secretary of Administration and Finance Jay Gonzalez. “It will help mitigate the erosion of our sales tax base.
Of course there remain other online companies that still don’t charge sales tax. One of the things that Amazon wants the state’s help with is changing the sales tax issue on a national level.
“Federal legislation is the only way to level the playing field for all sellers, the only way for states to obtain more than a fraction of the sales tax revenue that is already owed, and the only way to fully protect states’ rights,” Paul Misener, Amazon’s vice president of global public policy, said in a statement.
That’s probably still a ways off.
Meanwhile, it’s up to those stores that compete with Amazon to bring their “A game” to the table, because Amazon and online shopping aren’t about to fade away.