Editor’s Note: This story was updated at 4:30 p.m. to include comments from the governor’s office.
MONTPELIER — Online retail giant Amazon has agreed to begin collecting and remitting the state’s sales tax, providing a boost in revenue as the state faces another gap between revenues and spending in the 2018 fiscal year budget.
News of Amazon’s decision to collect and remit Vermont’s 6 percent sales tax beginning Feb. 1 emerged on Friday. It is expected to provide a significant boost to state revenue.
Vermont Tax Commissioner Kaj Samsom said Monday that state officials have known for some time that Amazon planned to begin collecting the state’s 6 percent sales tax. The retailer’s estimated sales tax payments to the state are confidential, however, according to Samsom, because information about sales and tax liability for individuals and businesses is not public.
“Generally, I think everyone knows Amazon is a major retailer,” Samsom told the Vermont Press Bureau. “We can say that the impact on sales and use tax revenue is measurable. We just can’t comment on specifics.”
The tax payments Amazon is expected to remit have already been included in state revenue projections that were used to craft Republican Gov. Phil Scott’s 2018 fiscal year budget proposal, according to Samsom. Scott is scheduled to reveal that proposal Tuesday.
“We were aware of this. It was not a surprise, to the point where we were able to incorporate it into the current year budget and the 2018 fiscal year budget proposal,” Samsom said.
Rebecca Kelley, a spokeswoman for Scott, said the governor is glad to have Amazon competing under the same conditions as Vermont-based retailers.
“Collecting sales and use tax is something required for all businesses located in Vermont. So, Gov. Scott is pleased that Amazon’s agreement to this improved tax collection method establishes a more fair and equitable playing field for Vermont small businesses and retailers,” she said.
State officials are not aware of any other online retailers that plan to voluntarily collect and remit the sales tax. Samsom said he hopes that other retailers will follow Amazon’s lead, however.
“I think the hope is that this is the direction that we continue in. I think it’s important for the level playing field discussion for the brick and mortars here in Vermont,” he said.
Neither state nor federal law require online retailers to collect the sales tax. Any retailer that has a physical location in Vermont is required to collect the sales. Consumers who purchase goods from online retailers without stores in the state are supposed to pay the sales tax directly to the state, but that rarely occurs.
A new state law will take effect on July 1 that requires online retailers to provide information to consumers about their sales tax obligation, but still does not require retailers to collect it themselves.
Senate President Pro Tem Tim Ashe, D-Chittenden, a former chairman of the Senate Finance Committee, noted legislation he and others introduced six years ago to ensure online retailers collected and paid the state sales tax. He said the issue was pushed by lawmakers because it “was a basic matter of fairness for us.”
“In the six years since, large online retailers have been unwilling to play on the same level field with local brick and mortar stores, contributing to the closure of some of them,” he said.
Ashe said Amazon’s announcement on Friday is “welcome” news because it “allows Vermont retailers to compete on fairer terms with the online retail giant.”
“I hope many more online retailers will join Amazon in the coming months,” Ashe said in a statement.
Erin Sigrist, president of the Vermont Retail and Grocers Association, also hailed the announcement as a victory for Vermont’s small retailers that compete with Amazon.
“Vermont retailers — mostly small, locally-owned and operated stores — compete each and every day with large online retailers. Many of those online retailers do not charge the state’s sales tax, providing them with an unfair advantage over Vermont-based businesses and denying the state revenue it should be receiving,” Sigrist said. “Vermont retailers work hard to provide quality products, meet the needs and price points of customers, and support our communities in a way that no online retailer will. Leveling the playing field by requiring all online retailers to collect the sales tax will allow all of our members to better serve Vermonters.”
Disclosure: Vermont Press Bureau chief Neal Goswami is the partner of VRGA President Erin Sigrist.