Online sales tax numbers are an opportunity

Online, mail order and phone shopping by Wrangell households and businesses last year totaled around $7.5 million, which averages out close to $4,000 for every person living in town.

That is a stunningly large amount of money.

And a large opportunity.

Not that residents could find every item, or even most items, on that $7.5 million shopping list in town. But if they could shift just 10% of online shopping to in-town shopping, that would equate to about $2,000 a day in additional spending at local businesses.

That is a lot of money in a small town.

Here’s the math: The borough in the past fiscal year received about $440,000 in sales taxes collected by out-of-town merchants, called “remote sellers” in the tax world. The vast majority of that came from online sales delivered to Wrangell addresses, with mail order and phone orders in the mix, too.

At Wrangell’s 7% sales tax rate, the $440,000 represents at least $7.5 million in goods shipped into town, after deducting the commission the borough pays to an offshoot of the Alaska Municipal League which assists about 50 cities and boroughs across the state collect from out-of-town businesses.

Tax revenues on purchases from out-of-town merchants represent about 12% of Wrangell’s total sales tax collections — and the number is growing. Tax collections have been allowed since a U.S. Supreme Court decision in 2018 said states, cities, boroughs and counties could collect sales taxes from remote sellers the same as in-town businesses.

Wrangell — or any small town — will never be able to recover all of the retail business it has lost to Amazon, Walmart and other online shopping sites. No community can compete with the prices, selection, availability and convenience of click-and-deliver commerce. That’s also true for bigger cities, too. Consumers are finding it increasingly easy to click first and visit downtown only when the free shipping is late.

But unlike bigger cities, where a small recovery might not mean much, pulling back $2,000 a day in sales to Wrangell would make a big difference.

Something to think about next time everyone starts to swipe through an online shopping trip.

- Wrangell Sentinel