CHEYENNE — A majority of the 42 states that have passed legislation to tax online retail sales have seen an increase in their sales tax revenue.
In Wyoming, which is one of the those states, final figures for the 2019 fiscal year show growth of 11.8 percent over the previous fiscal year.
The retail sector grew by $28.8 million. Within that sector, online sales taxes accounted for 17 percent of the growth, or about $5 million, said Wenlin Lieu, chief economist for the state Economic Development Division.
Since the state didn’t start collecting the online tax until Feb. 1 this year, the total increase represents only a few months of collections.
The fiscal year ended June 30.
Although the Legislature passed the online tax law in 2017, the state could not collect any taxes until a lawsuit cleared the courts.
About a year ago, the U.S. Supreme Court voted 5-4 to overturn an old pre e-commerce ban on states collecting sales tax from online sellers.
The national’s high court, in the South Dakota versus Wayfair case, found that states could impose the sales tax on businesses even if they had no physical presence in the taxing state.
Since Wyoming’s online tax law is identical to that of South Dakota, the state could go ahead and collect the tax, Terri Lucero, administrator of the excise tax division for the Wyoming Department Revenue, said last week.
Wyoming’s law applies to online businesses that conduct more than 200 annual transactions or $100,000 in annual sales.
The revenue department much earlier had estimated the tax could generate additional sales tax revenue of $23 million to $46 million.
Collections are likely to meet the lower estimate or come close given the addition of a new law passed by the Legislature last winter.
It requires marketplace facilitators to collect sales taxes on behalf of their sellers. Market facilitators are online brokers, such as Amazon or Ebay, that sell a third party’s goods and services.
The new law’s fiscal note estimates that involving the facilitators or brokers will result in $3.4 million in additional sales taxes in the 2020 fiscal year and $3.6 million by fiscal year 2022.
Supporter of the online and mail order tax bill claimed it would level the playing field between the online vendors like Amazon and the brick-and-mortar main street businesses.
An especially strong supporters was U.S. Sen. Mike Enzi, a former Gillette businessman and mayor.
Opponents said it would create a burden for small businesses.
The Supreme Court opinion appears to have tempered the opposition coupled with a fast and rather easy transition.
Also propelling the e-commerce movement was the increasing popularity of online shopping by consumers .
Although retailers opposed the tax when it was before the Legislature in 2017, supporters pointed out it is consumers who will pay the tax and who had not been voluntarily paying the levy for their online purchases.
It is far too soon to tell whether the tax will yield the estimated revenues for the states.
Yet the National Association of Budget Officers said the 3.5 percent growth in total sales tax collections can be tied at least partly to the increase in online collections.
With Wyoming sales tax revenues totaling $767 million,for the 2019 fiscal year, the online tax sales growth looks puny in comparison. But every dollar helps the budget.