In states that have the tax, households reduced their spending on Amazon by about 10% as compared to those in states where the levy is not applicable. For online purchases of more than USD 300, sales dropped by 24%, according to the report titled “The Amazon Tax.”
Until now Amazon has primed against brick-and-mortar retailers because consumers have not been required to pay a sales tax for purchases from the ecommerce site.
Amazon collects sales tax in 20 states, according to its website and the number is increasing as the company has become a popular target to help state governments generate more revenue to cover budget shortfalls. States lose an estimated USD 23 billion a year in uncollected sales taxes from online retailers.
The Ohio State University researchers tracked the spending of about 245,000 households that shelled out at least USD 100 on Amazon during the first six months of 2012, and then kept tabs on them through the end of 2013. About a third of the subjects lived in California, New Jersey, Pennsylvania, Texas and Virginia -- states where new tax laws were implemented during that time.
In addition to quantifying the sales impact, the researchers also concluded that brick-and-mortar stores didn’t hugely benefit from households reducing their spending on Amazon. That’s because many shoppers turned to online alternatives.
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