Surge in use tax collections could signal shift in state and local government finances (copy)

The wide open days of internet tax piracy appear to be fading ... and good riddance.

Year-end state reports of use-tax collections are up sharply, which reflects the movement of commerce to the internet and the actual collection of taxes that are due.

Use taxes are the same rate as sales taxes — 8.517% for most of Tulsa — except they reflect sales of taxable goods sold into Oklahoma from some other state.

Traditional brick-and-mortar retailers have always collected sales taxes, but until 2018, out-of-state online retailers routinely didn’t. Oklahoma consumers were supposed to report the use tax they owed with their income taxes every year, but many didn’t.

Under increased pressure from the state, online retail giant Amazon started collecting the taxes last year. Then the U.S. Supreme Court ruled all retailers had to do so.

Why would online retailers have to pay taxes for state and local services that they aren’t getting? They don’t. The tax is paid by the consumer not the retailer. If you live here, you’re using the police, streets and schools funded by the taxes. The online retailers are only collecting and remitting them from the legitimate taxpayer.

And they’re collecting quite a bit more.

According to figures from the Oklahoma Tax Commission, state and local use-tax revenue jumped almost $180 million — or 35% — last fiscal year, and by nearly $275 million — or 66% — over the last two fiscal years.

Use taxes are still a fraction of the total of sales taxes, but sales taxes also grew, by 16%. Nearly $280 million of that was the result of a new tax on motor vehicle sales, but even without that the increase was 9.3%.

All of that reflects a better retail environment for the state, and a much better tax base — one that’s fairer to local retailers and the state and local governments that we all rely on.

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