Sales Tax and the Internet: Pay Now or Pay Later

Garden State residents are divided over when sales tax should be collected for Internet purchases. Half of New Jersey residents say sales tax should always be collected when a purchase is made, while slightly fewer (42%) say Internet retailers should be exempt from collecting sales tax at the point of sale, according to the most recent statewide survey of New Jersey residents from Fairleigh Dickinson University’s PublicMind.

Governor Christie’s budget for the next fiscal year includes anticipated revenue in the millions from Internet sales tax collected at the point of sale. Currently, consumers are not charged sales tax for online purchases when they buy something from a retailer who has no physical presence in the state, but are expected to pay a “use tax” when they file their taxes in April that approximates the sales tax they owe for online purchases made in the previous year. Few, however, follow through, resulting in lost sales tax revenue for the state.

“Changing the timing for collecting Internet sales tax may be embraced by many since it will increase state revenue, but a sizable minority seems to like things the way they are,” said Krista Jenkins, director of PublicMind and professor of political science at Farleigh Dickinson University.

Almost three-quarters of New Jersey residents (72%) say they purchased something on the Internet in the previous 12 months, a number that’s higher among those under 35 (81%) and college graduates (80%).

New Jerseyans who have made a recent Internet purchase are split on when to collect sales tax for online purchases (49 versus 45 percent, respectively). However, among those 60 and older, college graduates and non-Internet shoppers, opinion is clear: Sales tax should be collected no matter where a purchase is made. Among these groups, nearly twenty percentage points separates those who believe sales tax should be collected immediately versus allowing the continued exemption of online sales.

“With the Internet increasingly used for purchases both big and small, exotic and mundane, many consumers have grown accustomed to saving money by not paying sales tax,” said Jenkins. “Although the revenue would be helpful to New Jersey’s struggling finances, there’s almost as much opposition to the change as there is support.”

Similarly, 40 percent are paying a lot or some attention to news stories about sales tax and the Internet. Slightly more attention is being paid by those who bought something on the Internet recently (43%), men (43%) and those in their prime earning years - 35-59 year olds - (44%). The majority, however, remain in the dark about the issue, with six-in-ten who describe their awareness as “just a little” or “nothing at all” (59%).

The last time questions about the Internet and sales tax were asked was in July 2012. At that time, over half (54%) said the added burden to consumers that would come by taxing Internet purchases was not worth the benefits to the state, with 33 percent who were sympathetic for the state’s finances.

The Fairleigh Dickinson University poll of 907 New Jersey adult residents was conducted by telephone with both landline and cell phones from May 27 through June 1 and has a margin of error of +/-3.3 percentage points.

Methodology, questions, and tables on the web at: http://publicmind.fdu.edu

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Methodology

The most recent survey by Fairleigh Dickinson University’s PublicMind was conducted by telephone from May 27 through June 1 using a randomly selected sample of 907 adults who reside in New Jersey. One can be 95 percent confident that the error attributable to sampling has a range of +/- 3.3 percentage points. The margin of error for subgroups is larger and varies by the size of that subgroup. Survey results are also subject to non-sampling error. This kind of error, which cannot be measured, arises from a number of factors including, but not limited to, non-response (eligible individuals refusing to be interviewed), question wording, the order in which questions are asked, and variations among interviewers.

PublicMind interviews are conducted by Opinion America of Cedar Knolls, NJ, with professionally trained interviewers using a CATI (Computer Assisted Telephone Interviewing) system. Random selection is achieved by computerized random-digit dialing. This technique gives every person with a landline phone number (including those with unlisted numbers) an equal chance of being selected.

Landline households are supplemented with a separate, randomly selected sample of cell-phone respondents interviewed in the same time frame. The total combined sample is mathematically weighted to match known demographics of age, race and gender.

Tables

Which of the following best describes how you feel, even if neither statement is perfect: Sales tax should always be collected when a transaction occurs, regardless of whether a purchase is made on the Internet or in a store that you visit OR Internet retailers should be exempt from collecting sales tax when a transaction occurs, even though retailers in stores that you visit must collect sales tax with every purchase [ROTATE]
	All	Age			Gender		Internet purchase in last 12 months?		Education
		18-34	35-59	60+	Male	Female	Yes	No	HS or less	Some college	Coll. grad.
Collect tax	50%	49	49	53	49	50	49	53	47	43	54
Be exempt	42%	43	45	35	45	40	45	32	43	51	37
Neither (vol)	2%	2	2	3	2	3	1	6	3	2	3
DK/Ref (vol)	6%	5	4	9	4	7	5	9	8	5	6

Have you purchased anything on the Internet in the past 12 months?
	All	Age			Gender		Education
		18-34	35-59	60+	Male	Female	HS or less	Some college	Coll grad
Yes	72	81	78	55	74	71	54	74	80
No	26	19	20	44	25	27	46	23	19
DK/Ref (vol)	2	0	2	1	2	2	0	2	1

As you may or may not know, there has been some talk recently about requiring customers to pay sales tax at the time a purchase is made for goods and services on the Internet. How much have you heard or read about this issue?
	All	Age			Gender		Internet purchase in last 12 months?		Education
		18-34	35-59	60+	Male	Female	Yes	No	HS or less	Some college	Coll. grad.
A lot	12%	4	16	14	15	9	13	10	9	9	15
Some	28%	24	28	29	28	27	30	22	22	29	29
Just a little	24%	23	27	21	27	21	26	18	20	26	25
Nothing at all	35%	49	29	33	29	42	31	49	48	36	29
DK/Ref (vol)	1%	0	0	1	0	1	0	2	1	0	1

Which of the following statements best describes how you feel, even if neither statement is perfect: The financial benefits for the state that will come from taxing internet purchases outweighs any burden to consumers…or…The added burden to consumers that will come by taxing internet purchases is not worth the benefits to the state ]ROTATE]. July 2012
	All	Party			Gender		Age
	All	Dem	Ind	Rep	Men	Women	18-34	35-54	55+
Worth it	33%	33	37	30	39	27	31	35	33
Not worth it	54%	53	49	59	50	58	59	54	52
Neither	4%	4	6	4	5	3	3	4	5
Unsure	9%	10	8	6	5	12	8	7	11

Exact Question Wording and Order

US1 and US2 withheld for future release

NJ1 and NJ2 released June 3, 2014

NJ3 withheld for future release

NJ4 released June 4, 2014

BG1 through BG5 released June 3, 2014

TAX1 As you may or may not know, there has been some talk recently about requiring customers to pay sales tax at the time a purchase is made for goods and services on the Internet. How much have you heard or read about this issue?

1 A lot

2 Some

3 Just a little

4 nothing at all

8 DK/Refused

TAX2 Which of the following best describes how you feel, even if neither statement is perfect:

Randomize

1) Sales tax should always be collected when a transaction occurs, regardless of whether a purchase is made on the Internet or in a store that you visit.

2) Internet retailers should be exempt from collecting sales tax when a transaction occurs, even though retailers in stores that you visit must collect sales tax with every purchase.

3) Neither [vol]

8) DK [vol]

		All respondents N = 907; MoE = +/- 3.7
Gender	Male	49%
	Female	51%
Age	18-34	26%
	35-59	44%
	60+	27%
	Refused	2%
Race	White	63%
	African American	11%
	Hispanic	16%
	Asian	4%
	Other/Refused	6%
Party (with leaners)	Dem	47%
	Independent	16%
	Repub	32%
	DK/Refused	4%

PublicMind Polling, Surveys, Market Analysis

Sales Tax and the Internet: Pay Now or Pay Later

Methodology

Tables