Do You Shop Online? It’s Going to Cost You More

Governor Rick Snyder signed legislation designed to require companies selling goods online to Michigan residents to charge the state’s 6 percent sales tax.

A new law requiring Amazon.com and other online retailers to charge Michigan sales tax could ring up $60 million in new tax revenue for the state next year. Ohio State University study found that in five states where similar sales tax laws were enacted, households reduced spending at Amazon by nearly 10 percent.

Retailers have long sought the bills in response to companies like Amazon not charging Michigan sales tax and dubbed the legislation “Main Street Fairness,” contending they had situations where customers would visit their stores, see products, ask questions and then purchase for less from an online retailer that did not assess the sales tax. Law takes effect October 1.

“It puts our retailers at a competitive disadvantage,” Snyder said at a signing ceremony of the law. “That’s not right.”

The Senate Fiscal Agency projects the legislation could yield as much as $60 million annually for the state, although the amount could vary substantially. If Federal legislators pass a law making clear online retailers have to recognize state sales taxes, the amount would grow into the low hundreds of millions, Snyder said.

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