In his state budget address, Gov. Chris Christie proposed forcing online-only retailers to collect New Jersey's seven-percent sales tax and turn that revenue over to the state. If you think this means a tax increase for you, think again. Consumers are already required to pay the tax, but many don't.

(Credit: Pekka Jaakkola, ThinkStock)
(Credit: Pekka Jaakkola, ThinkStock)

"A lot of these online-only retailers say, 'Oh, you don't have to pay the sales tax,'" said John Holub, president of the New Jersey Retail Merchants Association. "They actually exploit this and advertise it as, you don't have to pay the sales tax. That's simply not true. The sales tax is owed, but it falls on the consumer to have to report it on their personal income tax form."

It's unclear how much the state stands to gain from the plan, because it is part of a five-part proposal Christie has introduced that would generate $205 million in new revenue for the state. Holub said there are other benefits.

"No longer will these online-only retailers be able to exploit this loophole and have a competitive advantage over brick-and-mortar stores," Holub said. "This has the potential of creating a significant amount of jobs and injecting a significant amount of money back into local businesses."

The governor's plan would update our existing tax laws so that they reflect the 21st century marketplace, according to Holub.

A study by the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, commissioned by the NJRMA several years ago, concluded that New Jersey lost almost $171 million in state tax revenue from online purchases to out-of-state, online-only businesses in 2009. That number was projected to grow to $310 million by 2015.

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