Question

How are online businesses affected by the new state sales tax

Answer 1

In June, 2018; Supreme court overturned the 1992 decision of not charging sales tax from e-retailers as they don't have physical stores and ruled that states can collect sales tax everytime from consumers who do web purchases. According to a survey, states were losing sales tax revenue of approximately $30 billion annually due to peoples' preference of shopping online as there are many price advantages which actual stores are unable to provide as they are under states' sales tax. The implementation of sales tax will be different from states to states.

The sales tax law would affect online businesses in many ways. Online businesses would fail to offer products on discounts than the stores with the new sales tax. But now there will not be any price advantages to their customers as collecting sales tax from consumers for their purchases would result in no price differences between online shopping and retail stores. People would rather prefer to buy things from stores rather than shopping online. Shipping prices will also go up and the concept of free shipping over a certain purchase will vanish as implementation of sales tax makes doing businesses in the states costly. Though the big e-retailers would not get much affected by the sales tax, small businesses would get affected much. In order to stay in business, small online business must increase the prices of their products. Adding sales tax in the online shopping compels owners of the businesses to calculate their new pricing system in new ways and hire extra man power for doing all theses things which means extra costs for their businesses.