The sales tax ruling by the United States Supreme Court has hurt online retailers. The ruling stated that states have the right to collect upwards of billions of dollars in taxes from internet sales, with Amazon being the largest of those retailers. Traditional retailers like Target, Walmart, and Best Buy, meanwhile, saw shares rise about 1 percent or more after the decision. Overturning the sales tax ruling, which happened in a 1992 ruling, that limited tax collection by retailers from online sales, regardless of whether or not a business maintained a physical presence in a state. The ruling is viewed as a win, for retainers who maintain brick and mortar stores and have failed to compete online.
The sales tax ruling certainly will help those brick and mortar stores. The National Retail Federation stated that the new sales tax ruling, reflects change in the retail industry. “The retail industry is changing, and the Supreme COurt has acted correctly in recognizing that it’s time for outdated tax policies to change as well.” “This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules, whether they sell merchandise online, in store or both.”
Still, retailers must now wait on Congress to follow the court’s lead and pass legislation that would put new rules in place. Only five states in the United States don’t have a state wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. The sales tax ruling was hailed as a victory for an open and free marketplace. “Today’s ruling will give every retailer the opportunity to compete on a level playing field without the government’s thumb on the scale–that’s a win for those who believe in free markets,” Deborah White, general counsel for the Retail Industry Leaders Association, said in a statement.
For consumers it should bring about more competition and eventually bring down the cost of goods. “The physical nexus standard hampered industry wide competition and kept valuable tax revenues from local communities,” said Tom McGee, president and CEO of the International Council of Shopping Centers.