Georgia state lawmakers have agreed on a new internet and app sales tax measure designed to increase revenues. The new measure would close a loophole in the way taxes are collected online, allowing the state to ensure that it is collecting the money it is owed. If Gov. Brian Kemp signs it, it would take effect on April 1.
This new measure will solve two major issues with Georgia's tax system. Failing to collect this sales tax distorts the market, giving an unfair advantage to online sellers. Further, it will provide much-needed relief to Georgia’s beleaguered coffers.
I’m not opposed to online commerce. Online shopping is much more convenient than going to the store and makes daily life easier. And no one, of course, enjoys paying taxes. Still, the government must ensure its tax system is effective and fair.
The measure would fix a loophole that allows some sellers to avoid charging sales tax. “Marketplace facilitators” who have websites or apps others use to sell goods would be forced to charge a sales tax. As Jeff Amy of The Associated Press explains, Amazon currently does not have to charge taxes on goods sold by third-parties on its platform. The new tax measure would change that.
This could have a major impact on the state’s finances, adding an estimated $150 million in revenue.
And Georgia needs those funds. Kemp plans major budget cuts to state agencies, which could affect Georgians' daily lives. An extra $150 million in revenue can reduce the need for more cuts and lessen future impacts for Georgians.
The measure would also make the tax system fairer. Closing the loophole means that online sellers must charge sales tax like brick-and-mortar stores. It’s no secret that brick-and-mortar stores have struggled to compete with e-commerce. The new measure would ensure they have a fighting chance to stay in business.
These benefits could help Georgia's workers, too. The growth of e-commerce at brick-and-mortar stores’ expense could hurt rural areas of Georgia. According to the Brookings Institute, e-commerce stores have generated jobs, but they tend to be concentrated in large metro areas.
This could lead to a situation in which an e-commerce company operating in a metro city forces a local retail company in a small Georgia town out of business, hurting the town's economy and leaving its residents unemployed. Greater fairness in tax collection would give that seller a better chance at competing and staying in business.
There's no denying that the new measure could cause some grumbling. However, it will fix issues that have hurt Georgians for some time, and Kemp should sign the bill into law.