It may not be the best news for consumers, but Amazon.com's decision to pay the state's 6.25 percent sales tax is good for Massachusetts. Let's face it. The state needs more tax revenue. Collections in October came in $162 million short of estimates, and $48 million less than they were in October 2011, according to The Boston Globe. There are already rumblings that cuts are going to be needed to close a significant state budget gap for fiscal 2014. And, there's only so much extra revenue that state casinos, if they ever get up and running, can provide to the bottom line. Amazon is the world's largest online merchant. Lots of people purchase items online nowadays.
Yes, state consumers will have to pay a little more for items that they order online. And yes, the general public is already getting squeezed. But the agreement doesn't kick in until Nov. 1, 2013, which means it won't affect state consumers at all until the beginning of next year's holiday shopping season. That deadline will give those who shop online a period of adjustment, a much better option than having it start right now.
Instead of paying the state sales tax on Amazon purchases, several consumers told The Globe that they would now look for other online options where the additional revenue will not be required for purchases. However, higher costs also mean that state consumers could begin patronizing local small businesses more often if the price points are similar. That would definitely have an effect in Berkshire County, where the majority of businesses are small.
The agreement came following six months of negotiations between Amazon and the state. It came about because Amazon now has a physical presence in Massachusetts -- an office in Cambridge, a technology firm in North Reading -- a condition that requires them to pay the state sales tax revenue according to a 1992 Supreme Court decision. Internet shopping has increased dramatically over the last 20 years. The National Conference of State Legislatures believes that states missed out on an estimated $8.6 billion in revenue in 2010 by failing to collect sales taxes for online and catalog purchases, according to The Globe. The Massachusetts Main Street Fairness Coalition released a study that shows online tax loopholes annually cost the state $280 million in sales to state businesses, and some 2,000 jobs, The Globe reported. It's time for some of that money to remain in Massachusetts instead of leaving it.