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Sales tax collections from on-line retailers up; questions on budget effects

It’s been two years since North Dakota has been collecting sales taxes from Internet retailers.

That was made possible in the "Wayfair v. South Dakota" court case, which overturned the earlier "Quill v. North Dakota" decision.

"We've collected almost $60 million in state and local taxes from that decision in just two short years," North Dakota Tax Commissioner Ryan Rauschenberger said.

Rauschenberger said this year, because of the COVID-19 pandemic, which temporarily closed a number of brick-and-mortar retailers, there has been a sharp increase in the amount of on-line sales.

"If you look at the month of April, we're seeing a 500% increase year-over-year in online sales activity," Rauschenberger said. He said this raises some questions about changing behaviors among customers.

"How long, and for what period of time, will individuals continue to shop online instead of shopping locally at their local retail stores?" Rauschenberger said.

Rauschenberger said money from local stores stays in the local economy – and the shift to online sales could have a ripple effect.

"Even though the state may collect the same amount of sales tax, you don't have that money staying in the local economy, and having the multiplier effect," Rauschenberger said.

Rauschenberger said that will make it harder for the state to come up with an accurate revenue forecast for the next two year budget cycle, and harder for the preparation of state agency budget requests.

"That's something we really need to keep an eye on, beacuse taht could affect income taxes, sales taxes and other taxes, because that money is going out of state," Rauschenberger said.

Sales tax collections also dropped in North Dakota in April because of the slowdown in the oil industry.

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