INDIANAPOLIS | With the holiday shopping season set to kick off this week, a new study finds Indiana loses an estimated $77 million a year by not collecting sales tax for online purchases.
The research released Tuesday by the Indiana Fiscal Policy Institute and Ball State University is in line with the Indiana Office of Management and Budget's projection of $60 million to $80 million in annual revenue missed by not requiring online sales taxes.
John Ketzenberger, president of the nonpartisan policy institute, said in view of the $6.2 billion Indiana takes in via sales taxes every year, $77 million isn't much. But the failure to assess sales tax online raises questions about the state's tax equity and neutrality, he said.
"Those are two important concepts that the Legislature should consider, and we hope that this report will help them get to the policy questions as opposed to arguing over the facts of the issue," Ketzenberger said.
Earlier this month, Simon Property Group Inc., an Indianapolis-based shopping mall operator, sued Indiana demanding the state collect sales tax from Internet retail gian tAmazon.com.
Simon contends Amazon's warehouses in the state obligate the company to pay sales tax for its online sales and the state's failure to collect that tax puts other Indiana retailers at a competitive disadvantage.
State Sen. Luke Kenley, R-Noblesville, chairman of the Senate Appropriations Committee, believes the state would be best served by encouraging Congress to require all online retailers collect sales taxes, rather than trying to come up with an Indiana-only solution.