New York Says Goodbye to Tax-Free Online Shopping

April 16, 2008 09:43 AM
by findingDulcinea Staff
New York legislators have passed a bill that will require online retailers to collect taxes on goods shipped to the state. But will the “Amazon tax” hurt more than it helps?

30-Second Summary

The bill “will effectively end tax-free shopping in New York,” reports DMNews.

The “Amazon tax,” as it is being called, is expected to be signed into law by Gov. David Patterson, but analysts predict backlash, including challenges from Web businesses like Internet shopping giant, who oppose the measure.

But advocates for local retailers say the bill will “level the playing field” for New York’s brick-and-mortar stores.

James Sherin, the president of the Retail Council of New York State, writes in The Buffalo News that, despite’s criticism of the plan as bad for the consumer, “We think it is the right track toward shattering the legal stasis that for years has given all out-of-state merchants an unfairly large and unintended competitive advantage over New York’s brick-and-mortar merchants.”

Other groups representing New York retailers had argued for years that the exemption from sales tax gave out-of-state online retailers “an unfair competitive advantage,” writes Internet News.

Will the tax on online goods really drive consumers to local stores once online shopping boasts no tax-free advantage? Former New York Mayor Rudy Giuliani hosted “tax-free” shopping weeks in the city in the late ’90s that, he claimed, did a world of good for local retailers.

Time will tell if the “Amazon tax” has a similarly beneficial effect. For now, the State Legislature can rest assured it will receive an increase in tax collections once the bill becomes law. New York State estimates the new requirement will generate about $50 million in revenue this fiscal year.

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