This Black Friday and Cyber Monday, some online shoppers might notice they’re paying more state taxes.
This is the first holiday season online shopping regulars might notice the tax, which stems from a U.S. Supreme Court decision that ruled states could collect sales tax from companies that don’t have physical locations in said states. Virginia lawmakers passed a law formalizing the tax during this year’s General Assembly session.
Big online retailers, like Amazon, were already remitting sales tax to the state, Virginia Secretary of Finance Aubrey Layne said. Since the law passed, 1,200 more businesses have signed up to pay their share, he said.
It’s hard to know how much this holiday season’s online shoppers will contribute to the state’s coffers because of the new tax, but finance officials said it’s already yielded more than expected.
“If we did not put this in, we would’ve been well behind last year,” Layne said. Virginia will make about $150 million more a year from the internet sales tax, he said.
It’s not all coming in just because the tax is in place. It also helps that more people are turning to online shopping, Layne said.
According to Virginia Commonwealth University marketing professor Katie Gilstrap, shoppers have moved online en masse, as evidenced by large chain stores shutting down physical locations.
And times like Black Friday and the holiday season are “extreme” examples of people turning to online retailers to finish a shopping list.
“Convenience is becoming more and more precious and as peoples’ time is becoming more and more scarce,” Gilstrap said.
Virginians’ online shopping habits help the state make up for stagnating sales at brick-and-mortar stores.
Sales tax usually makes up about 16% of the state’s general revenue.
The sales tax base has declined in recent years because more shoppers are spending money on non-taxable purchases. The internet sales tax has kept total sales tax revenue afloat, finance staff told lawmakers at the House Appropriations retreat earlier this month.