Question # 17: Can you determine what percentage of our local Sales Tax comes from Internet Sales as a result of the Wayfair legislation?

Page updated on Mar 10, 2021 at 11:27 AM

Question:

Can you determine what percentage of our local sales tax comes from internet sales as a result of Wayfair legislation? (Mayor Wilson)


Response:

In FY 2020 online sales as a percentage of total local Sales Tax equaled an average of 28.81 percent of total sales taxes, or approximately $725,000 per month of the approximately $2.5 million in sales taxes collected each month.

For year-to-date FY 2021, the average of online sales as a percentage of total sales taxes collected has increased to 37.39 percent, or an average of approximately $979,000 per month.  December online sales were almost 42 percent of the total sales taxes collected. This equates to over $3.0 million per year in additional internet sales tax revenue.

This growth rate of online sales as a percentage of sales taxes collected shows a shift in how goods were purchased as a result of the pandemic. For year-to-date FY 2021, storefront sales are down 14.67 percent, while online sales are up 36.54 percent.  With the increase in online and the decrease in in person sales, total sales tax collections for FY 2021 has remained relatively flat when compared to FY 2020.  This would not be the case without the City’s ability to tax online sales. It should be noted that if the sales tax decline due to lower hotel occupancy was excluded, sales taxes would be increasing materially. In part this is due to the fact that some portion of the items purchased online by City residents were the types of items previously purchased at retail (brick and mortar) stores outside of Alexandria.

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