EAST PROVIDENCE, R.I. (WPRI) — A new law just signed by Governor Gina Raimondo Friday will impact online shopping for Rhode Island residents.
The legislation stems from a recent U.S. Supreme Court decision, making it easier for states to collect sales tax from online retailers who don’t have a physical presence in the state.
But it may also come at a cost to consumers.
“Save a few bucks online yeah, we see some sales,“ Jay Amado said.
Amado and his family frequently shop online, so he was disappointed to learn they would soon be paying Rhode Island’s 7 percent sales tax on all qualifying purchases made on the internet.
“I think it’s kind of tough I mean we pay enough sales tax as it is, to get the 7% sales tax on top of that which, I don’t know, I think it’s tough, I think it’s tough that consumers are being charged that as well,” he said.
House Finance Committee Chairman Marvin Abney introduced the legislation in the house.
“I think that once people get used to this, they will accept it,” Abney said.
He says the state is losing out on revenue from people choosing to shop online rather than in Rhode Island stores.
“Consumers were looking for a cheaper way to get the same products so I know this bill will level that particular playing field,“ Abney said.
Abney says Rhode Island is not alone in making these changes, and that many other states are taking the same steps.
Companies that sell taxable items in Rhode Island will now be required to have a permit, and collect 7% sales tax on purchases made by Rhode Island shoppers.
“The big retailers will now have a part on the form of collecting that tax and remitting it back to the state,“ Abney said.
Abney expects this new law to generate at least $11 million in its first year.
“It gives our businesses the opportunity to compete with retailers who are not present in the state,“ Abney said.
The law will take effect in 90 days. Legislators say the grace period will allow the online retailers to update their systems and prepare.