June 2, 2016

Time to take a serious look at taxing internet purchases

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Bill Jordan, MA, Senior Policy Advisor/Governmental Relations of New Mexico Voices of Children.

Bill Jordan, MA, is Senior Policy Advisor/Governmental Relations for New Mexico Voices for Children.

The announcement that Sports Authority will close all 463 of its retail stores across the nation is another loss for our local economy. Shuttering their three New Mexico stores will mean significant job losses and a loss of desperately needed tax dollars.

Bill Jordan, MA, Senior Policy Advisor/Governmental Relations of New Mexico Voices of Children.

Bill Jordan, MA, Senior Policy Advisor/Governmental Relations of New Mexico Voices of Children.

One of the reasons given for their demise (like Borders bookstores and Linen and Things) is changing buying habits. More Americans are shopping online and more storefront retail shops are struggling to stay afloat. New Mexico charges gross receipts taxes (GRT) on retail sales, but most internet sales go untaxed, meaning New Mexico is failing to collect millions of dollars every year, money that is needed to support education, public safety and health care.

By not taxing all internet sales, we’re also giving the online sellers a price advantage over local businesses that have to charge the GRT. In addition, since low-income consumers are less likely to shop online than middle- and higher-income consumers, this represents yet another tax break that goes to those who need it the least.

In 2013, Senator John Arthur Smith sponsored enabling legislation (SB 539) to tax internet sales. It passed, but Governor Martinez vetoed it. It’s time for New Mexico to modernize its tax system and bring it up to date with our nation’s changing buying habits. With deep cuts to higher education, underfunded schools, and more than $400 million in cuts to health care for our children, disabled and elderly New Mexicans, New Mexico cannot afford to keep losing revenue.

We may not be able to do anything about job losses from retail stores closing, but we can do something about all the lost revenue from online purchases.

Bill Jordan can be reached at bjordan@nmvoices.org.