It’s been a day I haven’t been looking forward to, but it finally came on Jan. 1 – Amazon is now charging taxes for Indiana residents (Nevada and Tennessee also are joining the 16 states that already collect taxes too). I completely understand the reasoning behind it. Brick and mortar stores were losing business to online sites (especially big ones like Amazon) and while they were paying taxes and providing jobs in the state, online sites weren’t.
Is it fair for online companies to offer prices for 7 percent lower than the local stores that charge state tax? No. Have I purchased items from Amazon that price matched local stores solely because they didn’t charge 7 percent and offered free shipping? Many times (but I’m a frugal buyer and always looking for the best deals – just ask my wife, I’ve already started Christmas shopping for next year).
In 2007, state officials agreed Indiana wouldn’t push for online sales tax collection with the Seattle-based Amazon when it opened its first warehouse in the state. Amazon now has five distribution centers in Indiana. But after lawsuits and lobbying from traditional retailers over the policy, former Gov. Mitch Daniels reached an agreement with Amazon to voluntarily start collecting state sales tax in 2014.
It’s bad news for some consumers like me, but good for the state because the collection of sales taxes from online-only retailers is potentially lucrative for state government.
According to the nonpartisan Legislative Services Agency, state officials project Indiana will see a $57 million per year boost in revenue just from Amazon sales. A study completed in 2012 by the Indiana Fiscal Policy Institute and Ball State University researchers estimates the state loses up to $114 million each year in uncollected sales taxes on internet purchases.
Does the change mean I’ll see lower property taxes right away? I’m frugal not naïve. I do hope that the increase in revenue will be used wisely and will eventually be impactful to me but right now I think that item is out of stock.