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Closing Online Sales Loopholes Could Net PA Revenue

Pennsylvania Rep. Eddie Day Pashinski, D-Luzerne County, wants to pass the Marketplace Fairness Act, which would apply more levies to online retailers.

The way people buy things—both in Pennsylvania, and around the country—is changing.

Online shopping is on the rise, and sales in physical stores have correspondingly declined. But what hasn’t changed much in Pennsylvania is how it taxes sales. And that’s losing the commonwealth money.

Pennsylvania ended the last fiscal year with revenue from its 6 percent tax around 2 percent below projections—a blow that contributed to its substantial budget shortfall.

Experts tend to agree that dip is largely because the commonwealth and other states struggle to apply levies to online retailers that don’t have a physical presence within their borders.

A handful of states have passed or are close to passing laws to close the loophole -- but Pennsylvania is not among them.

Democratic Rep. Eddie Day Pashinski, of Luzerne County, wants to urge Congress to pass its stalled Marketplace Fairness Act—which would levy the tax on the federal level.

“This is a new form of recurring revenue,” Pashinski said. “That’s exactly what Pennsylvania needs.”

However, he conceded, the idea has largely been a nonstarter, both on the state and—for now—the federal level.

“It’s called, which wall can you climb?” he said. “You know, sometimes you realize that you can’t get over that wall, so you’re going to focus in on other issues that you think you can accomplish.”

He noted that in Pennsylvania and in Washington, sales tax issues get eclipsed by topics like health care and the state budget.

(Photo Credit: perszon seo/Flickr)