A "Virtual" Challenge: The Potential Impact of Electronic Commerce on Local Government Revenues

John Thomas
2012 Berkeley Planning Journal  
Over the past twenty years many California cities have substantially increased their reliance on sales tax revenue. The growth of online shopping threatens to undermine this source of revenue, because taxes are not collected for many electronic commerce transactions. More importantly, cities relying heavily upon traditional retail may lose revenue, depending on how the State decides to redistribute taxes from online sales. Alternatives evaluated in this article include, redistribution according
more » ... to the location of the retailer, location of the consumer (a residence), and population. The potential impacts of online sales growth and revenue redistribution are evaluated for Bay Area cities, 15 of which are identified as highly vulnerable, rapidly growing middle class suburbs. In conclusion, the implications of policies to mitigate such impacts are explored.
doi:10.5070/bp315111522 fatcat:5yvtnzryfrhang44463f6paieq