Cuomo: Your Online Purchases Will Help Fund the MTA

Online purchases from third-party vendors would be taxed to help fund the subway.
Online purchases from third-party vendors would be taxed to help fund the subway.

We’ll get you, Amazon — and your little Etsy, too.

Governor Cuomo and Mayor de Blasio announced on Tuesday that they would raise money for the subway system by seizing currently uncollected taxes on internet sales made by third-party vendors on marketplace sites such as Amazon, Etsy and eBay. That sales tax would add an estimated $136 million to the expected $1 billion generated by congestion pricing.

“Congestion pricing tolls would be supplemented with state and city revenue from a fixed amount of the new internet sales tax derived from sales in New York City, with a growth factor,” the governor and mayor announced on Tuesday.

The pair also called for “a percentage” of revenue from the estimated $670 million in taxes on soon-to-be-legal marijuana to also fund transit.

The announcement of the online sales tax collection — which will affect a sizable portion of Amazon sales, plus all of Etsy and eBay’s sales — comes days after the online retail giant pulled out of a deal to build a headquarters in Queens.

Of course, the governor and mayor’s announcement was in the works for far longer, and resembles a bill put forward this year by Assembly Member Robert Carroll that would require the third-party vendors to collect the normal state and city sales taxes.

As such, Carroll was pleased.

“I’m very happy that the governor agrees that we have to make sure all internet purchases require all vendors to collect sales tax,” he told Streetsblog. “There is no reason why internet marketplace providers should be able to get a nine-percent discount on all their sales and undercut brick-and-mortar shops in New York.”

Carroll said his bill would raise $136 million in taxes on third-party vendors. Amazon does not release its sales figures, but it reportedly has roughly $42.75 billion in third-party sales nationally every year, worth about half its overall sales revenues.

Meanwhile, Carroll still wants internet sales to be charged an additional fee of $3 per package delivered.

“I want us to look at the cost of constant and ubiquitous deliveries because of companies like Amazon, whose deliveries cause needless waste and congestion in our city,” he said.

Amazon declined to comment for this story. The company does collect sales taxes on its direct sales, but not on third-party sales — yet. The company does collect such taxes in a handful of states that do require it. Etsy did not return a request for comment. After initial publication of this story, eBay issued a statement to Streetsblog:

We’re working with the governor’s office and the legislature to ensure New York consumers and small businesses are as least burdened as possible by the governor’s proposal. Once legislation is enacted, eBay complies with all applicable tax laws. We are also working with various other states on the recent and pending sales tax changes that will impact small businesses that sell on marketplaces and marketplaces like eBay. … Of note, eBay does not own inventory itself, but rather is a marketplace that connects buyers and third-party sellers.

Perhaps that is why Cuomo’s office said his proposal is all about fairness.

“It is counterproductive to principles of fairness, harmful to local economies, bad for retail jobs, and damaging to state and local revenues to allow online retailers to evade their responsibility to collect taxes on the sales they make into New York,” the governor’s office said in a statement. “This proposal ensures that out-of-state merchants do not have a price advantage over our State’s retail community.”

Meanwhile, as the Times reported last year, legalizing pot could generate up to $670 million in annual tax revenue, according to a state Department of Health report.

 

 

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