States can now make online retailers collect sales tax

After a landmark decision made by the Supreme Court this week, states can now require online retailers to collect sales tax. This in turn will lead to higher prices for cameras and production gear from places like B&H and Adorama.

The Court ruled 5-4 against Newegg, Overstock and Wayfair. This reverses a 1992 ruling the Supreme Court made that prevented states from forcing only companies with “physical presence” in the state to collect sales taxes.

“Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States,” writes Justice Anthony Kennedy, who authored the majority ruling. “Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this court’s precedents.”

This ruling hurts online retailers’ advantage over physical stores

Major online retailers have benefited from not having to collect a sales tax, allowing them to provide buyers lower prices than physical stores. Physical store prices for cameras are higher than online prices typically because of sales tax.

Higher Camera Prices

A lot of buyers like to go to online stores, like B&H and Adorama, to get camera gear without having to pay sales tax. This will soon end after states start dishing out the new tax requirements.

However, there is a positive coming out of these taxes. While many will not like the increase in price, the playing field is being leveled for smaller, physical stores that have greatly struggled to compete with online stores.

So, this ruling could mean that local camera stores will be getting a break, but at the same time it runs the risk of hurting those same retailers now that states can require online stores to collect sale tax. Small camera businesses that were benefiting from not having to collect sale tax for their online transactions could be affected by the ruling, in addition to online retailers.

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