E-Commerce Suspected in Slow Iowa Sales Tax Growth

Mar 17, 2016

The popularity of online shopping may be behind slower growth in Iowa sales tax collections in recent months.  

That’s according to one member of the Revenue Estimating Conference which reports lackluster growth in the Iowa economy.

The REC met Wednesday and predicted only a slight increase in tax revenues since their last assessment in December.  

Department of Management Director Dave Roederer says they are most concerned about sales tax collections.

“We're trying to determine if it's a softening of spending or maybe a change in the way Iowans are purchasing products,” Roederer said  

Roederer explains that online retailers like Amazon do not collect sales tax, and that may be having an effect.

“Could be.   Could be,” Roederer said.  “Do we have empirical data in Iowa?   We do not.  Is there data nationwide?  Yes, there is.”

Roederer adds requiring online retailers  to collect sales tax will have to come from the federal government.

“That's where we would need to be,” Roederer said.  

The three month period the conferees evaluated included the Christmas shopping season.   

The REC predicts roughly four-and-a-half percent growth in state tax revenue for next fiscal year.  That’s only a $30 million increase since December out of more than $7 billion in tax collections.