|More states institute online ‘Amazon tax’
|Written by Jeremy Burns
|Tuesday, 03 June 2014 04:28 PM America/New_York
Study says brick-and-mortar store sales grow in the aftermath
The recent implementation of what some researchers call the “Amazon tax” has led to a more level playing field for brick-and-mortar retailers, according to a study by three Ohio State University economists.
The study focused on the purchasing habits of nearly 3 million households in five states that began a permanent collection of taxes on Amazon purchases since 2012—California, New Jersey, Pennsylvania, Texas and Virginia—and found that Amazon purchases declined by 9.5% after the new state laws’ implementation. Amazon’s loss was brick-and-mortar retailers’ gain, however, as the decrease in Amazon purchases led to a 2% increase in purchases at physical stores. Further, the study found that only Amazon purchases were affected by the new tax laws, as sales from online operations of competing retailers—including those with brick-and-mortar counterparts—grew 19.8%.
Sales tax equality has been a contentious issue with retailers since Amazon began cast its shadow on the retail landscape. In states where Amazon does not have a physical presence, the online retail giant was not required to collect sales tax, putting brick-and-mortar retailers in that state at a pricing disadvantage.
The Institute for Local Self-Reliance and other retail groups and industry representatives have pointed to Amazon’s exemption from sales tax collection as one of the keys behind its marketplace dominance. —Burns