Amazon sales taxes worth at least $30M annually to NC, local governments
Posted January 28, 2014
Raleigh, N.C. — North Carolina's state and local governments will gain an extra $30 million a year in sales taxes once Amazon.com begins collecting the taxes next month, according to Barry Boardman, the legislature's chief economist.
The total amount could go as high as $43 million, Boardman told the Joint Legislative Government Oversight Committee Tuesday.
"Preliminary estimates are ... between $20 (million) and $30 million for the state and about $10 (million) to $13 million annually for local governments," Boardman said in response to a question from Rep. Pat McElraft, R-Carteret. "It's a big retailer, so it would have a big impact."
Amazon has resisted collecting sales taxes on purchases in North Carolina for years, but recently announced it would begin doing so on Feb. 1.
This is a de facto tax break that North Carolina residents are losing. In theory, Tar Heels are supposed to pay a special use tax if they buy from an out-of-state merchant that doesn't collect sales tax, but very few, if any, taxpayers fill out that line on their income tax form.
In 2012, the Department of Revenue estimated North Carolina lost as much as $214 million in sales taxes a year through online sales in which the retailers didn't collect the tax. North Carolina will be the 20th state in which Amazon collects sales taxes.
Sales tax is one of North Carolina's primary sources of revenue. The state expects to collect about $5.5 billion in sales taxes this year. The state sales tax rate is 4.75 percent, with an additional local sales tax of 2 percent in most jurisdictions, bringing the total tax to 6.75 percent. Some counties impose extra local sales taxes that bring the rate to between 7 and 7.5 percent.