Consumers Unfazed by Possible Changes to Online Sales Tax

The next round in the legislative battle over collecting taxes for online purchases will have to wait until the 114th Congress. In the meantime, a plurality of voters say they wouldn’t change their shopping habits even if Internet retailers are required to collect state sales taxes from consumers.

In a recent Morning Consult poll, 45 percent of respondents said they wouldn’t alter their online shopping routines if faced with a sales tax in all states. Nine percent even said they’d make more purchases, suggesting a majority of registered voters would be unfazed by the implementation of provisions found in S. 743, known to supporters as the Marketplace Fairness Act.

12.10 shopping behavior considering online sales tax

The bill, introduced last year by Sen. Mike Enzi (R-Wyo.), would give states the authority to collect sales and use taxes among remote online retailers, with the exception of small businesses. A use tax is comparable to the rate of a sales tax but applies mostly to out-of-state transactions.

“Consumers shop online for a number of reasons,” said Stephen Schatz, a spokesman for the National Retail Federation, which supports Enzi’s bill. “Selection, convenience, shipping. Consumers don’t even think about tax being a problem.”

Still, 36 percent of poll respondents said they would shop less if faced with an online sales tax. Voters also established some boundary lines, with 52 percent saying the federal government shouldn’t go so far as to require retailers to collect online sales taxes.

12.10 approve-disapprove of online sales tax


That responsibility would fall to the states under provisions in the Enzi measure, which the Senate passed 69-27 last year. The House took no action on the bill, and some lawmakers are just fine with that loss of momentum.

“For Congress to pass an Internet sales tax would do enormous damage to millions of small mom-and-pop online retailers at a time when we’re trapped in economic stagnation,” Sen. Ted Cruz (R-Texas) said this week in an interview. “The Internet has been a haven for entrepreneurial creativity and unbridled free speech, and the worst thing we could do to the Internet is allow a bunch of politicians from Washington to impose new taxes and crushing regulation on the Internet.”

Some small business groups also oppose the legislation.

McKane Davis, co-owner of and co-founder of eMain Street Alliance, said Enzi’s bill would mandate that U.S. companies with annual revenues in excess of $1 million collect state sales taxes for online purchases.

“It keeps companies from growing past the $1 million threshold, which is why Walmart wants this legislation passed,” Davis said in an interview. “They can keep small companies small forever.”

He added that the accessibility and cost to collect and remit an online sales tax is burdensome for many small businesses. “I’m happy to collect the sales tax, but Congress has to do it right,” he said. “Make it easy and free.”

NRF’s Schatz said in an interview that an online sales tax would even the playing field between brick-and-mortar retailers and online sellers.

The concept of fairness in general seems to be the only common ground between supporters and opponents of the legislation.

“Everybody should be subjected to the same rules,” Davis said. “I think they got it wrong this time around. They’ll have to include us in the conversation” next time, he said.

The poll was conducted Dec. 6 through Dec. 9 among a national sample of 1,385 registered voters. The results have a margin of error of plus or minus 2.6 percentage points.

Morning Consult