New Jersey retailers are at a competitive disadvantage to out-of-state, online-only sellers, business groups said Thursday in announcing their support for applying sales taxes to all in-state purchases.
The state lost nearly $171 million in sales tax revenue from online purchases in 2009, according to a study conducted by the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. The study was released today by the New Jersey Retail Merchants Association.
Association President John Holub said out-of-state businesses are benefiting from state law, which currently holds individual consumers responsible for paying sales taxes for online purchases.
“The independent, Main Street retailers are being punished for following the law,” Holub said, adding that retailers with a presence in the state currently are paying sales taxes. This leaves only the purely online companies like Amazon.com without direct sales-tax obligations.
Holub said the state system puts an unnecessary burden on consumers, who may face penalties if they are audited for failing to pay the online sales taxes.
Will Irving, of the Bloustein School, noted estimates in the study that found applying the 7 percent sales tax universally would return 1,400 jobs to the state.
Robert Prunetti, president of the Mercer Regional Chamber of Commerce, described the current situation as an “unlevel playing field,” noting New Jersey businesses should be in the same position as those in other states that have begun applying online sales taxes, like California.
Harvey Finkel, proprietor of Clinton Book Shop, said he can spend time with customers, only to be told that they will shop online due to the sales tax. He added that retailers would still have to work to attract customers if sales taxes were applied uniformly.
Holub said the lobbying effort for a state bill has just begun. He noted there is a federal effort to apply online sales taxes, but the effort has been moving slowly.