UPDATED 23:40 EDT / JUNE 21 2018

POLICY

Online shopping could cost more as Supreme Court rules states can demand sales taxes

People who often do their shopping online might see prices rising soon following a U.S. Supreme Court decision Thursday to allow states to implement sales taxes on goods sold through e-commerce.

The 5-4 decision overturns older precedents regarding states not being allowed to demand a sales tax if the store had no physical presence. Forty states had asked for this to be reversed, saying that billions of dollars were being lost annually. Justice Anthony Kennedy agreed, stating that older rulings had now become “obsolete” in the era of online shopping.

Five states don’t collect sales tax in the U.S., but it’s thought that of those that do, somewhere between $8 billion to $23 billion a year was being lost. In the past, if merchants didn’t charge a sales tax, then it’s up to the customer to do so, but most likely didn’t.

“The Internet’s prevalence and power have changed the dynamics of the national economy,” Kennedy wrote. “This expansion has also increased the revenue shortfall faced by states seeking to collect their sales and use taxes.”

It’s possible that smaller retailers will be the hit the hardest. For example, Amazon.com Inc. already charges sales tax on goods that it sells directly from its own store, but people selling goods on Amazon Marketplace may not have done the same.

Kennedy said that the playing field had been unlevel for too many years and things had to change. “A virtual showroom can show far more inventory, in far more detail, and with greater opportunities for consumer and seller interaction than might be possible for local stores,” he said.

Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch agreed, although Chief Justice John G. Roberts Jr. dissented, saying that e-commerce had become a vibrant part of the U.S. economy and disrupting it would lead to problems.

“Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress,” said Roberts. “The court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago.”

Will this have a profound effect on how Americans shop? According to experts, the reason why people in the U.S. are shopping more online is a matter of convenience, rather that saving the pennies, according to The Washington Post, although some studies suggest indeed it is all about the low prices.

On Twitter ,President Trump wrote, “Big victory for fairness and for our country. Great victory for consumers and retailers.” Many of the comments below that didn’t seem to think so, stating that it will hurt consumers and small retailers.

Image: GotCredit via Flickr

A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU