Garden State losing millions in tax revenue in cyberspace

A Rutgers University study concludes New Jersey is losing more than $170 million a year because out-of-state online-only retailers are not collecting the state’s sales tax from customers.

The failure of online-only businesses to collect the sales tax gives them an unfair competitive advantage, says John Holub, president of the New Jersey Retail Merchants Association.

“New Jersey retailers, and in particular the independent Main Street retailers, are being punished for following the law while out of state online-only retailers are not,” he said.

Some of those suffering retailers are in Fanwood, according to Mayor Colleen Mahr.

“We believe that the tax loophole is actually threatening businesses in my community,” said Mahr. “We need to stop that inequity so that our towns can actually thrive because a thriving downtown is what’s going to keep our property values stable.”

Requiring the online-only retailers to pay New Jersey’s 7 percent sales tax would indeed boost the local economy, said Will Irving with the Bloustein School at Rutgers.

“We would estimate that if you had full collection, you could see as much as 1,400 jobs returning to the state with associated annual increases of $44 million in income and $95 million in gross domestic product,” Irving said.