A recent US Supreme Court 5-4 decision the paves the way for states to charge sales tax for online consumer purchases – even if the retailer has no physical presence in that state. That could mean an annual windfall for the Commonwealth, reportedly at least 300 million dollars in revenue. But first the Virginia General assembly will have to set the ground rules and define how that will happen. That means the online sales tax collection okayed by the Supreme Court decision may not go into effect until sometime next year.
11th district delegate Sam Rasoul (D-Roanoke) calls its “equality for small businesses,” noting that brick-and-mortar stores have to charge that sales tax, putting them at a competitive disadvantage perhaps price wise. As the internet market got off the ground the decision was made that those online retailers would not have to charge sales taxes – as a way of nurturing that then-nascent market – but those days are long gone and web-based retailers are now a threat to many traditional shopping outlets.
“[Now] they’ll be able to play on the same level playing field as internet businesses. This is a big win for [traditional] small businesses,” says Rasoul.
On a Washington DC radio station recently Governor Ralph Northam said that tax windfall could be earmarked for any number of needs – education, transportation, a rainy day fund etc. “I think there will be bipartisan support [for any needed legislation},” says Rasoul, “it’s only fair for Virginia small businesses to play on the same field as internet businesses.”
Some of those state sales tax receipts will filter down to local governments that are also seeing revenues diminished when shoppers go online instead of to a local physical store. “Once it’s done [any legislation] the bulk goes to the state government but a portion goes to [localities].
It’s a win-win,” notes Rasoul. Putting all the mechanisms in place, the software businesses will need, coordinating with other states on collections, etc. could take longer than a year says Rasoul.