Local counties will lose an estimated $16.3 million from 2011 through 2013 in uncollected sales tax receipts from Internet purchases, according to a national report released Friday.
The study by Global Insight for The National Association of Counties, The National League of Cities and The United States Conference of Mayors focuses on the financial significance of local tax revenues lost to E-commerce and Internet sales.
“We have been lobbying for this for quite a while,” Montgomery County Commissioner Debbie Lieberman said.
The reports suggest Montgomery County will lose an estimated $9.3 million in tax receipts; Warren County $3.2 million; Greene County $2.2 million and Miami County $1.5 million.
Lieberman said the sales tax revenue could help make up for $9.5 million in state cuts to Montgomery County’s General Fund over the last five years.
County and city sales tax receipts are usually collected at the point of purchase and provide funding for local services, such as street repairs and law enforcement services. States and local governments have long had difficulties collecting sales tax due from out-of-state sellers, according to the report.
The Marketplace Fairness Act — which passed out of the U.S. Senate earlier this year and is pending in the House of Representatives — would require that sales taxes, based on the rate where the buyer is located, be collected on Internet purchases.
“It been talked about for years,” Lieberman said. “This brings fairness back to bricks and mortar, our local stores.”
Greene County Administrator Howard Poston said he has not seen the report and questioned how the estimates were calculated.
“Absolutely, the county could use the revenue,” Poston said
The analysis relies on the 2009 University of Tennessee report, “State and Local Government Sales Tax Revenue Losses from Electronic Commerce.” That report included an extensive survey of state tax bases and surveyed state tax enforcement officials nationwide, to develop estimates of losses at the state level.
The new report extends that analysis to some cities and counties. The analysis shows that collectively state and local governments in the United States lost nearly $1.3 billion in 2011, $1.5 billion in 2012 and will have a projected loss of $1.7 billion in 2013.
Estimated loss in sales tax revenue from Internet sales 2011-2013
Montgomery County: $9,356,000
Warren County: $3,233,000
Miami County: $1,521,000
Source: IHS Global Insight