South Carolinians soon could pay more to shop online after the U.S. Supreme Court reversed course Thursday, saying states can charge sales tax for online purchases.
The ruling is sure to elate the state's small retailers. However, it was not clear Thursday how quickly that change would occur and what its impact will be.
South Carolina's main retail association said the state could collect an added $250 million a year in tax revenue — money from S.C. shoppers that could be used to hire school resource officers, retain teachers or fill vacancies at understaffed state agencies.
By a 5-4 vote, the nation's highest court decided states now can require online shoppers to pay sales tax when they shop online at retailers that do not have a store or other physical presence in their state. For instance, the tax now could be collected from S.C. shoppers who shop online at outdoor retailer L.L. Bean.
State officials — including in South Carolina, with its 6 percent sales tax — have argued they were losing out on millions — if not, in some cases, billions — of dollars in revenue a year under the Supreme Court's previous 1992 decision.
Likewise, advocates for the state's mom-and-pop stores — which primarily make sales in brick-and-mortar outlets, not online — say that two-decade-old decision harmed small business owners.
"These very brick-and-mortar retailers are the ones who employ one in four South Carolinians," Lindsey Kueffner, head of the state's Retail Association, said in a statement Thursday. "(They) pay property taxes, lease or own retail space, support their communities through charitable contributions and help their communities recover after natural disasters."
Online shopping nationwide and in South Carolina has surged — thanks to the internet's availability — as more shoppers buy goods online instead of driving to stores.
Already, South Carolina expects to collect about $346 million in sales taxes from online sales in 2017-18, according to an October analysis by the state's Revenue and Fiscal Affairs Office.
"It remains to be seen what the exact fiscal impact of this (court) decision will be," said Rick Reames, a former head of the state's Revenue Department. "However, it's premature to expect large windfalls from this decision. South Carolina already collects (sales tax) on 22 of the top 25 e-retailers."
Those companies — for example, Target — would not be impacted by Thursday's decision, he said.
"To some extent, the marketplace already addressed this problem," Reames added. "The largest physical retailers are now also the largest online retailers.
“I don’t think the Legislature should spend all this anticipated revenue just yet.”