Money-starved states and other municipal governments aren’t any strangers to taxing ecommerce to generate revenue.
States, for instance, have been collecting sales tax on ecommerce purchases by consumers and businesses for years.
Now, a growing variety of states, including Colorado, Minnesota and Washington, are on the lookout for options. Solutions include collecting a percentage of the fee consumers and businesses pay to have ecommerce packages delivered to homes or offices to pay for road repair and related projects.
How ecommerce is taxed in Colorado and Minnesota
For instance, in 2022, Colorado became the primary state to impose a retail delivery fee. That became one component of a 10-year, $5.4 billion transportation funding package. The retail delivery fee is anticipated to herald $78 million a 12 months. At that level, the fee represented roughly 15% of latest revenues within the package.
All businesses were initially required to gather and remit a 27-cent fee on each retail delivery order by motorized vehicle placed to a location in Colorado. Since being implemented, the fee has increased to twenty-eight cents. Nevertheless, Colorado also has amended the law to exempt businesses with $500,000 or less in annual sales from having to gather the fee.
Currently, two states — Colorado and Minnesota — have passed bills that collect a percentage of ecommerce delivery fees for fixing roads, bridges, and related transportation infrastructure.
Now, Washington is considering similar laws. Washington has 57,000 miles of city and county streets. They account for 71% of the entire miles within the state, based on the Washington State Department of Transportation.
Cities primarily fund their transportation systems on their very own. As they do, 69% of transportation expenditures come from local sources, which face pressure because of competing local demands and structural budget deficits.
Meanwhile, the state’s share, which comes from state fuel tax receipts, is in decline. Consequently, local governments are searching for brand spanking new transportation revenue sources, based on a newly published report from the Washington State Joint Transportation Committee.
Why Washington is considering latest laws
A fee in Washington of 30 cents per order could generate between $45 million and $112 million in revenue in 2026, based on the report. The authors estimate that would grow to between $59 million and $160 million by 2030.
The fee to implement is estimated between $200,000 and $540,000 per 12 months over the primary several years.
Thus far, Washington has produced just one report. Meanwhile, no bill to date has been introduced within the Washington state legislature.
Still, consumer and business ecommerce spending continues to extend. Because it does, much more deliveries are being made. And more states including Latest York, Ohio, Nevada, Minnesota, Colorado, and Washington are exploring taxing delivery fees for road repair revenue.
“While neither Nevada nor Ohio has moved forward with a delivery fee, each states assessed the mechanism’s viability as a revenue mechanism including its revenue stability, efficiency, ease of administration, social equity, user equity, and transparency,” the report says.
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