SC’s online sales tax revenue doubles thanks to COVID-19 pandemic spending
While South Carolina has struggled with budget losses due to the COVID-19 pandemic, the amount of tax dollars brought in from online sales doubled during the last year, according to a statement from the S.C. Department of Revenue.
In all, department officials reported collecting more than $311.5 million in sales and use tax between Nov. 1, 2019, and Oct. 31, 2020, from remote sellers and online marketplace facilitators.
A remote seller is a company that is out of state and has no physical presence in South Carolina, and an online marketplace facilitator is a person or a business that facilitates sales on behalf of a third party, such as Amazon.
In all, the Department of Revenue collected $128.1 million from remote sellers and $183.4 million from marketplace facilitators, according to the statement.
That money will go into various state funds used to pay for the state’s needs, including education, and offset local property tax exemptions: $165.7 million to the general fund, $41.3 million to the Education Improvement Act fund, $41.3 million to the Homestead Exemption Fund. The rest will be distributed to cities and counties that charge local sales taxes, according to the statement.
“This means an additional $311.5 million will be available for South Carolina needs,” Revenue Director Hartley Powell said in a statement. “The SCDOR’s remote sellers policy and the marketplace facilitator law now ensure that all online retailers collect and remit Sales and Use Tax on all sales, just like brick-and-mortar stores, helping level the playing field and bringing more tax dollars into the state.”
Department officials said the increase in revenue is largely a reflection of a national trend of increased online sales. With the coronavirus pandemic pushing people indoors, online shopping boomed over the last year.
South Carolina began pulling in money from its online shoppers after a June 2018 U.S. Supreme Court decision gave states the ability to change online retailers without a physical presence in the state. Just one year after the decision, South Carolina had brought in about $40 million in added sales tax revenue.
Despite the success in bringing in revenue from online shopping, forecasts of South Carolina’s budget have been steadily shrinking throughout the pandemic. Lawmakers are expected to have about $1.2 billion to allocate during the upcoming year, down more than $800 million from forecaster’s February predictions.
