BOSTON (State House News Service) — If Massachusetts was able to collect sales taxes on transactions conducted over the internet, the state could add $339 million to its coffers, money that could be used to fund transportation infrastructure, according to
Treasurer Steven Grossman.
Grossman told reporters on Tuesday that the state should negotiate an agreement with one of the biggest online retailers, Amazon, and that Congress should pass a federal law that would allow states to collect $23 billion in online sales taxes nationwide.
“While I never like to see taxes go up, nevertheless, this is an issue of fairness, Main Street fairness. We have a half-million people that work in the retail sector; bookstores and others are at a competitive disadvantage. They lose lots of sales because they don’t get a chance to sell at a competitive price. Amazon is selling books at 6.25 percent lower prices than you can get them at a little bookstore,” Grossman said.
Grossman said the $339 million Massachusetts would receive if online sales taxes were collected would be able to help the state’s transportation system, which has long struggled with high debt, unmet capital needs and an inability to advance expansion projects.
“If Congress finally does the right thing and approves it nationally, that equates over the next 25 years to $5.1 billion that could be used in terms of bonding and annual expenditures. And I calculated that that would have quite an impact on transportation,” Grossman said.
Even without action by Congress,
Gov. Deval Patrick could potentially secure an agreement with a big retailer, such as Amazon.
Last week, mayors from around the state asked Patrick to “move aggressively” toward reaching a sales-tax deal with Amazon before the holiday shopping season.
Earlier this year Amazon purchased a robotics company in North Reading and opened a research office in Kendall Square in Cambridge, establishing the "brick and mortar" nexus that local officials say should give the state the authority to force the company to collect the taxes from online shoppers.
More than a dozen states across the country, including many led by Republican governors, have reached deals with Amazon over tax collections, including Nevada and New Jersey. Amazon began collecting sales taxes in Texas on July 1, and this month started collecting taxes in California and Pennsylvania.
Patrick in June called tax agreements between states and Amazon "delightful and encouraging" and said his administration would begin talks with Amazon.
Talks between Patrick administration staff and Amazon are underway, though Patrick said he has not yet met with Amazon’s CEO.
“We have welcomed their business to Massachusetts and talked about ways we can help them create jobs and grow,” said Administration and Finance spokeswoman Alex Zaroulis, in a statement about Amazon. “At the same time, we are in regular contact with our mayors and small business owners and understand their concerns. The administration is committed to keeping the Massachusetts business climate competitive and will continue to urge Congress to take action to level the playing field."
Massachusetts Main Street Fairness Coalition estimates that an agreement with Amazon could boost state coffers by between $25 million and $45 million in additional sales tax revenue.
“Many states have already got those agreements,” Grossman said on Tuesday. “I would hope that we would move aggressively toward negotiating an agreement with Amazon, but it is also going to require Congress at the federal level when they finally get back to business hopefully after this election to finally say, ‘Let’s collect internet taxes, $23 billion of sales taxes aren’t being collected.’”
While Grossman is waiting to see Patrick’s transportation financing plan in January, he said an internet sales tax is a bipartisan solution that has the support of Republican New Jersey
Gov. Chris Christie.
“I’ve come up with a solution. It’s out there. People are talking about it, and I think largely people are comfortable with this because it is about Main Street fairness and about helping infrastructure and transportation. I’ll wait for the governor and others to come up with other ideas. I think collectively we’re all going to have to be part of a comprehensive solution,” Grossman said.
Grossman’s estimates for how much Massachusetts could take in with an online sales tax are higher than some estimates.
“The amount of money that we lose, according to the retailers, is $339 million a year. That’s the amount of money that could be collected by out-of-state and internet retailers from Massachusetts citizens,” Grossman said.
The Alliance for Main Street Fairness estimates Massachusetts has lost out on $600 million in sales tax collections from e-commerce since 2007, including $132 million in 2012 and $116.8 in 2011.
The campaigns of
U.S. Sen. Scott Brown and
Elizabeth Warren did not respond to requests to explain whether they would support such a measure.
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