Local government officials in many parts of the country say the rise of tax-free online shopping has had a big impact on their budgets. Albuquerque, for example, relies on the sales tax — or what is known in New Mexico as a gross receipts tax — for nearly two-thirds of its general fund revenue, which totaled about $ 500 million last year. The city’s finance department estimates that it lost out on $ 5 million in tax revenue on Amazon purchases in 2016, although calculations are difficult because of a lack of available data. Lost revenue from other online retailers adds millions of dollars more.
Mr. Keller, the mayor, said Amazon benefited from city services, such as the roads used by delivery trucks carrying its packages and the police officers who makes sure packages aren’t stolen. But unlike local retailers, the company doesn’t chip in.
“This is the fundamental way we fund American society, and thanks to technology they found a way to opt out of that,” Mr. Keller said. “They’re getting a free ride.”
For businesses, the practical effect of that free ride is probably small, at least outside of a handful of high-tax jurisdictions. Local sales taxes add just 1 or 2 percent to prices in most cities, not enough to sway most shoppers’ decisions. But retailers said the tax was a matter of fairness: Why should local businesses be at a disadvantage, however small, against a much larger, out-of-town rival?
“The 2 percent doesn’t drive someone from my place to Amazon, but it doesn’t help,” said Richard de Wyngaert, owner of Head House Books, an independent bookstore in Philadelphia. “I just feel that if not all businesses, why any business? If we don’t all pay taxes, why should any of us? To me, it’s ludicrous. There is a social contract with your citizens.”
Candelora Versace, who with her husband runs a custom jewelry shop in Santa Fe, N.M., said that her customers frequently buy gemstones online, then come into the store to have them put into settings. She said that she doubted they were explicitly trying to avoid paying Santa Fe’s roughly 3 percent sales, but that regardless of their intent, the effect on the community was the same.
“The roads don’t pay themselves. The schools don’t fund themselves,” Ms. Versace said. “When they don’t want to pay the tax, it cheats us. It cheats those of us who live here and have businesses here.”