How much are states losing from Internet sales

Date posted: January 10, 2011

Buying on the Internet is increasing by leaps and bounds, and a large portion of these sales escape sales taxes. Do we know what this costs states, including North Carolina? N.C. Cooperative Extension economist Mike Walden responds.

“This is important to North Carolina, as well as most states, because the sales tax is one of the biggest revenue generators for state income. Now if you look at North Carolina, we actually do collect money — sales tax on online sales — except that information has to provided voluntarily by the citizen — by the taxpayer. And so it is thought that many people don’t provide that information, so still there (are) some losses here.

“So how big are these losses?  Well, a recent study out of the University of Tennessee estimated that over $8 billion in sales taxes are lost or were lost this year for all states due to not taxing all on line sales. North Carolina’s share of this is estimated at $162 million dollars. And because online buying is increasing as a part of all buying, we expect these losses to go up. In fact, the estimates for North Carolina’s losses next year are put at $200 million dollars.”

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