If The Internet Sales Tax Fails, Expect Higher Gas Prices

Brian Fung | Nextgov | May 7, 2013

Legislation allowing states to collect sales taxes on purchases made over the Internet—approved by the Senate in a 69-27 vote Monday evening—faces an uncertain future in the House.

What would happen if the push for Internet sales taxes falls apart? In at least a couple of states—Maryland and Virginia—it could mean higher gasoline prices.

One reason the Senate’s Marketplace Fairness Act came up now is that states are hungry for new revenue. Balanced-budget rules and the slow economic recovery have combined to produce a $55 billion budget shortfall affecting all states this year.

That hunt for revenue makes online shoppers an appealing target; estimates are that collecting sales taxes on Internet purchases could put an additional $23 billion a year in state coffers.