Is Online Shopping Hurting The Local Economy? - - Tyler, Longview, Jacksonville |ETX News

11/26/07-East Texas

Is Online Shopping Hurting The Local Economy?

With more and more people shopping online, there is ultimately going to be less sales tax revenue.  Several online shopping sites are not required to issue a sales tax, unless the company has a physical presence in the state of Texas.  Does something need to be done to level the sales tax playing field?  KLTV 7 talked to local lawmakers to find out.  

"People have been predicting the decline of bricks and mortar stores for ten years now because of shopping online, and that has just not happened," said Tyler Mayor Joey Seeber.  "People like personal service and the attention they get in a real live store."  Seeber says the local retail business is as strong as ever.  Still, the state as a whole is losing money. 

 According to the Texas State Comptroller's Office, Texas loses around $500 million dollars in sales tax revenue from online shopping every year.  Last year, however, the state did take in $1.5 billion dollars in use tax.  A use tax is complementary to the sales tax.  If you shop online and buy a taxable good from another state, you are supposed to fill out what's called a Texas Occasional Use Tax Return.  That's for both businesses and individuals, but the state says not everyone is doing that.

The question now, how does the state make up that money and level the playing field for those local businesses who have to issue a sales tax?  U.S. Congressman Jeb Hensarling says right now taxes are too high.  Instead of increasing taxes on online vendors and purchasers Hensarling says he's "working to reduce taxes on East Texas brick and mortar businesses." State Senator Kevin Eltife doesn't believe we have come that far.

"I think it is something we have to watch," said Senator Eltife.  "I don't think there is a problem per say with local entities, or the state losing a lot of money, but I think it could evolve down the road where it really effects tax revenue."  Right now, only time will tell.

Molly Reuter, Reporting.


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