Sales Tax is collected by the state and is utilized for the improvement of the infrastructure and public organizations.
Online sellers are enjoying great profit margins by avoiding sales tax payments. There is no positive impact of retailing on the economy of the community because these online stores do not give any taxes and keep all the profits for themselves.
Positive impact of retailing on the economy with community based stores
Community-based stores invest in their neighborhoods and play a major role in the overall quality of life in the place where they exist. They create employment for many individuals in the community. If the sales of the retail stores keep on deteriorating because of the online stores a time will come that the economic health and the local flavor of healthy competition will vanish completely.
Local brick-and-mortar retail is the major strength of the local economy. This positive impact of retailing on the economy creates jobs, pays taxes, generates fund and develops a healthy business environment for the existing and upcoming businesses.
People and businesses tend to migrate to communities with a strong retail presence.
Where do sales tax go? Government uses the sales tax to pay for many public services such as; education, infrastructure, law enforcement, health etc. A 2009 University of Tennessee study estimated that in 2012 alone, the lost revenue could reach as high $23 billion nationwide. Especially as states grapple with budget gaps, this revenue will be critical in helping local communities provide necessary services to the residents.