Georgia business owners have felt the pinch over the past few years competing with increasingly popular online retailers like Amazon. For years, these online “marketplace facilitators” have not paid state sales tax, offering a convenient and low-cost alternative for consumers. Now, after being stalled in the Senate last year amid push-back, Governor Brian Kemp signed House Bill 276 into law on January 31 of this year. It will go into effect on April 1.
This bill dramatically changes the landscape of sales tax for online retailers in Georgia. As part of a growing trend, Georgia will now join states including Alabama and Mississippi by charging web-based marketplace facilitators that generate over $100,000 annually sales tax.
What does this mean for local businesses?
Without paying sales tax, these marketplace facilitators could offer products at lower prices than local businesses. House Bill 276 works to eliminate that practice, leveling the playing field for Georgia business owners. These online giants might also face increased regulation.
One goal of the bill is to bring customers back to local businesses. Shoppers returning to local brick-and-mortar stores may be looking for greater value in their purchases. Clerks and salespeople will find opportunities to forge valuable relationships within their community. Savvy business owners will increase the value proposition for their goods and services. Local businesses can win more customers with improvements to customer service and in-store amenities.
A future for Georgians
This bill also generates more income for the state. Georgia officials have estimated that the state is losing close to $150 million every year on lost tax revenue, but some private studies indicate the losses could be closer to $750 million. Senate Finance Committee Chairman Chuck Hufstetler claims the bill could conservatively generate as much as $10 million every month. He says, “It’s great for cities, counties, schools and Georgia businesses[.]”