For most, sales tax is generally a bit of a nuisance when it comes to shopping and consuming goods from retail or local small businesses. For Stillwater, sales tax can be how the city’s budget lives and dies. Lately, the retail side of things in Stillwater is showing increasing signs of putting the budget on life support.
In what has been called a “retail crisis” as of late, Stillwater has had a number of stores and restaurants close its doors for good over the past year, including Hastings, JCPenney, Rue 21, Dress Barn, RadioShack, Noodles and Co., Applebee’s and Charlie’s Chicken.
Some of these stores have struggled not only at a local level, but at a national level. Norman McNickle, Stillwater city manager, has said that the problem goes deeper and that some retail stores aren’t closing solely due to their business models.
“The city of Stillwater is funded in two ways: one is a utility department… and the other major way is through sales tax,” McNickle said.
While the retail crisis has been gaining attention as of late, McNickle says the problem goes back further than only one year.
“We have seen a steady decline in the sales tax since 2014, to the point where since December of 2016 [the city] has cut $13.1 million out of the budget,” McNickle said. “In analyzing what we can in sales tax, we have determined there has been a significant drop in retail spending here in Stillwater.”
McNickle says the main reason for all of this is online shopping.
“We attribute nearly 100 percent of that to the internet and to internet retailers,” McNickle said.
Online retailers are not required to pay sales tax, which puts them at an 8.8-percent advantage over stores in Stillwater that are required to pay sales tax.
This has caused not only a what some call a retail crisis, but a hole in the budget for not only Stillwater, but the state as well. McNickle believes the best and easiest way to alleviate the problem is to have legislation passed.
“There is a bill called the Main Street Fairness Act of 2017 in the United States Legislature,” McNickle said. “That would level that playing field and require all internet retailers to collect and remit sales tax to the individual states.”
Currently, if a state wants to collect sales tax from online purchases, it has to enact its own laws to do so. Some have and some states such as Oklahoma haven’t, making the passing of these bills important for smaller markets such as Stillwater.
“I think the answer is legislative. I think that the playing field needs to be leveled,” McNickle said. “I think they will eventually see the light, out of necessity.”