Georgia may yet tax Walmart.com Rolexes, short-term rentals, ride-hailing and other online commerceOne failed proposal this year would have put a fee on Uber and Lyft, plus taxis and limos, to pay for "innovative" transit and mobility programs in Georgia. Credit: Ståle Grut / NRKbeta / Flickr CC BY-SA 2.0
By Maggie Lee
A new organization is lobbying to close what it calls a “loophole” in Georgia’s internet tax law that it says are costing the state, counties, cities and people who don’t have internet access.
“Because they’re not being collected, those are dollars that are not being used in our communities, and for me, that’s a problem,” said Billy Honor, at a state Capitol press conference on Tuesday.
He’s the pastor at Grant Park’s Pulse Church, but he was there as leader of a new nonprofit, the Faith, Justice and Truth Project.
Not all online purchases come with a sales tax in Georgia. For example, at Walmart.com or Amazon.com, buying something that one of those companies is selling out of their own warehouse, will incur a sales tax. But if it’s something that some third party has listed for sale via that site, the seller is likely not collecting sales tax.
The state Legislature is already looking at how to apply taxes to so-called “marketplace facilitators:” sites that link buyers with sellers, but don’t sell everything themselves. So that would include parts of Walmart and Amazon, plus short-term lodging services like Airbnb and VRBO, as well as ride-hailing services like Uber and Lyft, handmade-goods site Etsy and more.
At Phipps Plaza, a Rolex or anything else would come with an 8.9% sales tax that’s divided among Georgia, Fulton County and the city of Atlanta.
Hence why some folks are mad about this no-tax setup. State and local governments are built to run in large part on sales taxes. Sales taxes help pay police, keep the streetlights on, run the libraries and any number of typical state or local government functions.
So if the brick-and-mortar store model is faltering, so does tax revenue. And no government wants to be seen raising income taxes or property taxes to make up for it.
Not to mention that physical stores employ people and pay local property taxes.
Honor said that those taxes on third-party facilitator commerce ought to be collected to pay for public services. And second, he said it’s unfair that people who have internet access are able to buy some things without paying taxes — whereas people on the wrong side of the digital divide have no choice but to go to stores.
The social justice aspect is a fairly new argument for an idea that’s already gotten pretty broad support at the state Capitol. Part on the grounds that governments need money to run public services, and part on the grounds that brick-and-mortar stores are at a disadvantage to tax-free retailers.
“The demand for county services, the demand for city services is not going down. The cost for those services is not going down,” said Larry Ramsey, deputy general counsel of Association County Commissioners of Georgia.
Most state legislators have already voted for the idea of taxing marketplace facilitators, but the annual session ended this year before the state House and Senate came to any agreement on any of several similar proposals.
A report from FJTP estimates that collecting sales tax on marketplace facilitators could be worth $500 million to $700 million per year. That’s much higher than a state estimate of about $157 million that would be raised annually by 2024 on one version of a marketplace facilitator bill. According to the fine print, the state estimate didn’t look into Walmart, whereas FJTP did closely. So that’s at least part of the difference.