Online sales tax update (US)
The New York Post reported that the Supreme Court has ruled that US states can now force online sellers to collect sales taxes, irrespective of where their customers live. This changes a 50-year rule that exempted sellers from collecting taxes on out-of-state transactions. The ruling can affect hundreds of thousands of sellers, including those selling via Amazon (about US$32 billion last year). We reported on the Supreme Court suit earlier this year, initiated by South Dakota, which claimed it was being robbed of millions of dollars in sales tax because internet sellers shipping to the state were not collecting sales tax. We are seeing a clear trend of states beginning to impose taxes on e-commerce transactions. This is (in our view) a good structural phenomenon, as it removes sales/VAT tax distortions and also repairs the sales tax revenue, eroded when sales moved online.