Let’s start with the good news: North Dakota sales tax revenue from online retailers jumped by 500% in April, according to a recent report by Forum News Service. It equates to $2.9 million in revenue for the state in April 2020, compared to $475,000 the previous April.
It was made possible by a court decision that happened two years ago this month, when the U.S. Supreme Court decided, in South Dakota vs. Wayfair Inc., that states are entitled to sales tax dollars on business done within their borders. The decision was meant to – quoting an oft-used expression – “even the playing field” between local retailers and online sellers who have no physical connection to a state yet may be doing millions of dollars annually in online transactions in a place like North Dakota.
Previously, online sellers were able to offer lower rates because they were not forced to tack on a percentage for state sales tax. Yet the hardware store on Main Street – which provides local jobs, property taxes and services to the community – is legally bound to add a 5% markup to products to appease state law.
In the Forum News Service report from earlier this week, North Dakota Tax Commissioner Ryan Rauschenberger praised the Wayfair decision, saying that in addition to creating a fair retail environment, the decision also has provided “a bit of stability in these difficult times.”
So in hindsight, it appears the Supreme Court decision on South Dakota vs. Wayfair – a decision we felt was long overdue – has come at an opportune time.
That’s the good news.
The bad news is that the coronavirus pandemic is speeding a shift to online sales, and it is prompting even more change to the local retail landscape. The FNS report this week noted that the shift toward online retail is coming faster in North Dakota than in other states. For example, North Dakota’s April-over-April number was 500%, but Wisconsin’s was much lower, at 133%.
And also this week, the Herald reported more closures in the local shopping mall.
The retail store Eddie Bauer has closed, continuing a downward trend at the mall. Other stores likely are following – Victoria’s Secret, which is closing 250 stores nationwide, appeared to a Herald reporter this week to be boxing up merchandise in what could be a bad omen for the women’s clothier.
Columbia Mall’s management would not respond to the Herald requests for comment – another omen about the shopping center, which once was a regional tourist destination.
The coronavirus pandemic has done much damage to the retail, service and restaurant industry – the newspaper industry, too. It’s possible, however, that the pandemic has only hastened the rate of change that likely was coming to so many industries.
It’s unfortunate, since we prefer in-person shopping with local retailers who have made commitments to the city and region.
The consolation, if there is any, is that at least North Dakota and other states now are benefiting from the Supreme Court’s 2018 decision on online sales tax collections.