A ruling last week by the U.S. Supreme Court is almost certain to raise the price of the online shopping sprees most Americans have come to embrace.
But the decision — which allows states to require online retailers to collect sales tax even when they have no physical presence in that state — is good news nonetheless.
Not only does it level the playing field between major online business and brick-and-mortar storefronts, the ruling could allow Texas to collect hundreds of millions of dollars more each year in sales taxes it could not under the ruling the court overturned.
Making online retailers play by the same rules local businesses do could help more traditional retailers better compete, and that will be good news for many businesses in East Texas.
The five-justice majority behind the ruling — a rare coalition of conservative and liberal justices — overturned an outdated 1992 Supreme Court decision known as Quill that barred states from requiring retailers without a “physical presence” within their borders to collect sales taxes.
The Quill decision came before the explosion of commerce on the internet. At the time, annual mail-order sales amounted to $180 million nationwide. Today, internet and other remote sales are approaching $500 billion a year, and still climbing. According to the Texas comptroller’s office, our state loses $1.1 billion in uncollected sales tax every year.
Now, the playing field is tilting back toward level. Of course we will still shop online, but the built-in price advantage will be gone. As they are forced to include sales taxes, the price of online purchases may be more like those you’ll pay here at home. That means you may be more inclined to keep your money here at home.
As we have said before in discussions about this issue, shopping local helps you and your community. Local retailers employ our neighbors, reside in our communities and support local causes. Their employees are active in our civic organizations and local boards. They pay property taxes that help pave the roads we drive on, hire teachers and more.
An out-of-state online retailer provides none of those local benefits. Now, at least, more of those faraway businesses may be collecting sales taxes for their transactions and sending them back to Texas periodically.
For that to happen, however, the Texas Legislature must update state laws to take advantage of this court ruling. We understand some lawmakers might be skittish about being seen as increasing taxes, but this is not a new tax. It would simply properly be extending the current sales tax to all companies, instead of discriminating against some.
Lawmakers would be foolish to pass up this chance to update and improve our state’s tax system, level the playing field for business and improve the state’s fiscal condition.