Monday, July 22, 2024

Should North Carolina collect sales tax from the internet? Wilmington says yes

City Hall in Wilmington might be hundreds of miles from Washington D.C., but the effects of federal legislation can be felt right here at home (Port City Daily photo/MICHAEL PRAATS)
City Hall in Wilmington might be hundreds of miles from Washington D.C., but the effects of federal legislation can be felt right here at home (Port City Daily photo / MICHAEL PRAATS)

WILMINGTON — Washington D.C. might be hundreds of miles away, but decisions made on Capitol Hill have significant impacts on local governments including the City of Wilmington’s. That is why the city works with its delegation to help leaders push for legislation that would directly benefit the Port City.

Things like the tax reform that is moving through congress that could threaten the Historic Preservation Tax Credits could directly impact Wilmington, and its residents.

Something the city has been pushing for is the requirement for online retailers to charge, and distribute sales tax to municipalities, according to the Assistant to the City Manager for Legislative Affairs Tony McEwen.

In a Supreme Court Case Quill Corp. v. North Dakota the court ruled that catalog retailers (think L.L. Bean) could not be compelled by states to “collect sales tax unless the company had a physical presence in the buyers state,” according to the Tax Policy Center. This law has carried over into the digital age and is the precedence set for internet sales.

“There are some bigger online retailers like Amazon that now have started to elect to collect those at point of sale and distribute that to the state but that is not an across the board thing,” McEwen said.

The City of Wilmington is hoping to have the laws changed that would require sales tax to be collected and distributed to cities and states. For Wilmington, sales tax is the second highest revenue source after property taxes.

Where does Wilmington get its money? Find out here

Not only would the additional sales tax help the city with extra revenue, but McEwen said it is an issue of fairness.

“You might have a store down here on Front Street that has been here for 50 years and struggling to survive and they have to charge extra to build in that sales tax. It makes their products a little bit inflated versus being able to buy something online,” he said.

In the long run, McEwen said it could cause problems with the infrastructure of the city, as well as the tax base.

“You can see what happens if a business on Front Street or Mayfaire continues to have a decline because they just can’t compete with online retailers,” he said. “What does that mean for our infrastructure here if they vacate, what happens to property owners and their investments, what happens to our tax base?”


Michael Praats can be reached at Michael.p@localvoicemedia.com

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