The U.S. Supreme Court ruled on Thursday to allow states to mandate the collection of sales taxes by online retailers. This will create a new revenue stream from state and local governments.
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Tennessee, Louisiana, Arkansas, Oklahoma and Alabama are among the top states that could see more revenue in their coffers due to their high reliance on sales taxes, according to a report released by Fitch Ratings on Friday.
But exactly how much states will benefit is expected to vary.
Depending on estimates – this could mean a windfall of up to $34 billion in state and local sales tax revenues but more conservative estimates, which factor in that the majority of large internet retailers already collect sales taxes through voluntary agreements, put the estimates around $8 to $13 billion, notes Fitch.
E-commerce sales are expected to continue to take an increasing portion of total retail sales, so state and local governments should be rejoicing about this ruling. However, it isn’t completely straightforward.