Online shopping could soon cost Americans more.
The U.S. Supreme Court ruled in a 5-4 decision Thursday that online retailers can now collect sales taxes on out-of-state purchases.
However, West Virginia Governor Jim Justice put out a statement Friday saying he does not support taxing West Virginian’s any further.
“When I took office and our state was struggling financially, at that desperate time, I might have considered supporting legislation to enforce West Virginia sales tax on out-of-state transactions,” Justice said.
“However, I do not support adding additional taxes on our people in this manner,” said Justice.
The case, South Dakota v. Wayfair, overturned a 1992 Supreme Court decision that protected online vendors from sales tax obligations if the vendor did not have a physical brick and mortar store in the state.
The Supreme Court justices acknowledged that when the previous ruling was made, courts could not have envisioned the modern e-commerce economy we live in today.
Three large online retailers, Wayfair, Overstock and Newegg, challenged the law in court Thursday and lost.
Gov. Justice says this is a legislative issue that would have to be passed for the state to enforce the collection of out-of-state sales taxes.
“With our state's growing economy, I don’t want to reach into West Virginians' pockets when we don’t need to,” Justice said.
Senate Finance Chair Craig Blair says he agrees with Justice from that standpoint.
“I want to stress that we’re not looking at this as an additional revenue stream. There’s no desire by the Republican majority to increase taxes on the people of the West Virginia,” Blair told The Register-Herald Friday afternoon.
Blair says the Senate Finance Committee has been watching and studying the online tax issue for over a decade.
“We are a revenue neutral legislature. We’re not interested in applying more taxes,” said Blair.
He says, however, it is also a matter of “fairness.”
“We want to be able to treat our citizens fairly… We want to make sure when we do levy taxes that they’re levied in a fair and equitable manner,” Blair said.
Blair says the new ruling will have to be studied further, and the U.S. Congress would have to first pass legislation before any changes would be considered locally.
Director of the West Virginia University Bureau of Business and Economic Research John Deskins says the 1992 Supreme Court ruling was based on catalog sales not internet sales. He believes the new ruling will “level the playing field” for brick and mortar stores in West Virginia.
“There’s no reason you should have to pay sales taxes in one scenario and not the other,” Deskins said.
At a local retailer, a consumer is going to pay a six percent tax rate. However, consumers have the option to shop online, pay no sales tax, and get the item cheaper which is not fair to local stores, Deskins said.
“It really is a disadvantage to local brick and mortar stores. I personally think it’s a good move,” he said.
Deskins says the increase in online sales over the years has cost states million of dollars in revenue. He believes the new ruling could bring a significant amount of revenue to the Mountain State.