Could Internet sales tax help Delaware retailers?

Delaware’s senior U.S. Senator Tom Carper supports the online sales tax because it would further improve Delaware’s unique distinction among its neighbors as the “home of tax-free shopping.”

Delaware touts its tax-free status on signs at the state border to welcome shoppers and uses that designation to lure visitors from Pennsylvania, Maryland (both charge six percent sales tax) and New Jersey (seven percent sales tax).  But  with the growth of online shopping, that tax-free advantage First State businesses have long enjoyed has been diluted.

Senator Carper recently took to the Senate floor to lay out his reasons for supporting the Internet sales tax.  “I want more people from other states, including the three around us, to come and buy things in my state.  If they can buy those things over the Internet and not pay a sales tax, then why would they come to Delaware?”

Carper’s optimistic that if the Internet sales tax measure goes into effect, Delaware retailers might regain some business that had previously been lost to the web.  “If they have to pay the sales tax that’s going to be collected by that Internet provider selling to people in those states with sales taxes, they might come to Delaware and shop.  We want them to come.”

Under the legislation, Delaware residents would not be charged a sales tax for online purchases. 

The state has become a big hub for Internet sales giant Amazon.com.  The company, which is also supporting the Internet sales tax measure, has two facilities in Delaware.  Amazon recently completed construction on a massive warehouse in Middletown, hiring hundreds to work at the one million square foot structure.

New Hampshire is the only other state without a sales tax on the East Coast.  Out west, Alaska joins Oregon and Montana as the only other states in the nation lacking a statewide sales tax.  Right now, online retailers are required to add sales tax only in states where they have a physical location.