It’s time for Colorado to tax online purchases

To the editor:

A crisis is looming for local governments that are dependent on sales taxes, and it will come crashing down in the near future.  Traditional brick and mortar retail is entering its final struggle against certain death. Its impact will first be visited on small rural towns and counties.  Internet-based consumer buying is escalating at a far greater rate than most prognosticators expected.

It is urgent that Colorado pass legislation requiring the collection of state sales tax on Internet/phone purchases that are being delivered by the Postal Service, UPS, FedEx and soon by services such as the Uber  taxi. This legislation must include a provision for the collection and remission of all local government sales tax based on the address of the delivery.

Without this, the likelihood of large revenue shortfalls are going to be felt by Delta County and all towns with sales tax as a part of their revenues. In the case of Delta County, this will mean declines from the sharing of county tax with all municipalities and entities such as the library district and landfills. For us locally, the City of Delta without property tax and relying heavily on sales tax this crisis could be monumental.

Anyone who does not realize this impending doom of local government revenues certainly has their head deep in the sand. Those who think this is some distant future threat had better check what is happening in major cities around the world with such basics as online grocery shopping, pharmaceutical and drug store items, prepared meals, clothing and even liquor and your evening dinner.

Even the big box brick and mortar stores such as Wal-Mart, Target, Sears and JC Penny are launching major online platforms to buffer against the future.  This is nothing compared to the efforts of Amazon and EBay that are selling for any and everybody. None of these produce one cent of tax for Colorado or any of its counties and towns.

I predict that within five years or less, you will see big box stores such as the Wal-Mart here in Delta and neighboring towns disappear as too much of market share will be lost to online purchasing. I doubt that much can be done to stop this trend, so our state and local governments must act with great urgency to protect their revenues by leveling the playing field when it comes to sales tax collection.

Tom Huerkamp

Orchard City

One Response to "It’s time for Colorado to tax online purchases"

  1. Alex Oxford   December 7, 2016 at 8:00 am

    Colorado actually already has legislation for online sales. The real issue is enforcement.

    The issue isn’t so much that these are “online” sales as much as they are “digital goods”. When you pay for something using Uber in Colorado, it is considered a ‘service’ and not a ‘tangible object’. As such, it is tax-exempt because services are non-taxable in the US. There are similar issues with other digital goods such as ebooks.

    I agree with your sentiment. Sales and use tax is, unfortunately, very complicated (and slow moving).

    Alex Oxford, Product Marketing Manager @ Taxify – Effortless Sales Tax Automation