The Supreme Court’s ruling Thursday allowing states to require online retailers to pay sales tax is being welcomed by some local and state lawmakers in Missouri as an opportunity to generate additional tax revenue, and many brick-and-mortar businesses are hailing the decision as a lifeline for their operations. However, some small online retailers in the state worry about how the decision will affect their ability to compete with larger ecommerce companies.
Thursday’s decision reverses a decades-old ruling that said online retailers didn’t have to collect tax on every sale unless they had a physical presence in the state.
Estimates published last fall suggest Missouri could generate an additional $180 million to $275 million in tax revenue. Cities and counties that charge sales taxes could see an additional boost.
However, Missouri may have to approve new laws to take advantage of the Supreme Court’s decision, and it’s not clear if state lawmakers would support such legislation.
For municipalities that charge sales taxes, changes in revenue due to the collection of online sales taxes may be only 1 percent or 2 percent, but that can make a difference, according to Tracy Hansen, director of finance for Des Peres.
Although many internet retailers, including Amazon, collect sales taxes, some online stores do not. Businesses with physical storefronts in Missouri say the Supreme Court’s decision will help level the playing field.
However, some worry that the court’s decision will complicate business for small internet vendors. The American Legislative Exchange Council suggested smaller online retailers could now be subject to thousands of taxing jurisdictions and may potentially be driven away from doing business in certain states as a result.