Illinois Cities Say Online Shopping Cuts Into Their Revenue

Nov 27, 2017

Credit Flickr user Pictures of Money / "Money" (CC BY 2.0)

As the holiday season kicks off, more people are using sites like Amazon and eBay to buy gifts.

The booming online shopping industry has cities across Illinois worried. They say it’s taking a bite out of their budgets. 

Illinois began collecting the state sales tax on more online purchases in 2015. But that generally doesn't include the extra percentage in local sales tax that is paid at a store. Peoria city manager Patrick Urich says his city has seen decreased revenue, and blames the outdated way Illinois collects taxes.

“We still have taxing systems set up assuming that we have an economy based on goods and it was goods that were purchased in your community," he said. "And what we're seeing today is that we're more of a service-based economy, and we don’t tax services in Illinois. And then we're also an economy that's now moving more towards online sales.”

Change could come at the federal level to allow cities to tax what their residents buy over the internet. But online sellers worry collecting the sales tax for thousands of jurisdictions could be difficult and time-consuming, and put them out of business.