Merchants, mayors renew call for sales tax on out-of-state e-commerce

TRENTON – With holiday-shopping season in full swing, New Jersey merchants and local officials today bemoaned the loss of millions of dollars in sales tax revenue to out-of-state internet-only retailers.

On the heels of a Rutgers study in September that said the state in 2009 lost an estimated $170 million in sales tax revenue, the N.J. Retail Merchants Association again called on state lawmakers to enact legislation that would require such businesses that lack any sort of physical presence in the state to collect and forward the same 7 percent sales tax that bricks and mortar businesses have to assess.

On top of the new post-Thanksgiving tradition of ‘cyber Monday’ shopping that the Association says cost governments millions of dollars in uncollected revenue in one day, the Association wanted to make the case for a sense of urgency to have the Legislature act sooner rather than later.

“This is threatening downtown New Jersey,’’ said Association President John Holub. He said that not only does the state lose out on sales taxes but property taxes as well since such e-businesses don’t have the overhead of maintaining a physical store.

He acknowledged that there is little chance of any proposal being introduced in the lame-duck session, but he said there is a better chance of something occurring after the new session begins in January.

Holub said the Association has been in communication with lawmakers on both sides of the aisle as well as the state Treasury Department’s Division of Taxation.

He would not identify any specific lawmakers yet who support their efforts to enact a state law, and he cited a Taxation division report for 2009 that he said estimated the lost sales tax revenue even higher than the Association did: About $200 million.

The Treasury Department could not be reached immediately for further comment.

John Morris, president of the Madison Chamber of Commerce in Morris County and owner of Stewart Morris Inc., a family-owned flags and trophies business, said today that with businesses operating on thinner margins, 7 percent “makes all the difference in the world.’’

And Gary Passanante, mayor of Somerdale in Camden County and the Business Council director with the N.J. Conference of Mayors, said the lost revenue creates a ripple effect that wears down communities as small businesses close and blight begins to encroach on downtowns.

But absent a federal solution – which Holub said would be more preferable – they need to wage a public-relations campaign while working the Statehouse hallways to obtain a legislative cure.

“The problem compounds daily,” Holub said. “Something needs to be done.”

Previous coverage:

Retailer says small businesses threatened by non-collection of sales taxes by out-of-state e-commerce

  Merchants, mayors renew call for sales tax on out-of-state e-commerce