Why online shopping could cost you more in the future

A one-time savings on a single purchase is costing the local economy

By Rachel Lucas - Anchor / Reporter

ROANOKE, Va. - As more of us go online to shop, our local economy is put at risk. Roanoke Mayor Sherman Lea said online shopping is one of the biggest contributors to a multimillion dollar budget shortfall in the city.

As consumers we're always pinching pennies and more and more we're finding that shopping online is the cheaper route. But, that's costing localities like Roanoke.

As WSLS 10 has reported, Roanoke city faced a $4 million budget shortfall for the 2018 fiscal year. To make up for that shortfall, Roanoke City Council approved a new solid waste fee beginning next year.

Lea said there are a number of contributing factors that lead to the shortfall, but there is one primary reason to blame.

He said the No. 1 reason for the shortfall is because the city isn't getting the sales tax revenue it used too because local consumers are no longer shopping local, but instead are shopping online.

"It's been a challenge, it's been a challenge,” Lea said in reference to balancing the budget.

A challenge Pauline Wood, owner of a 31-year-old downtown staple business Shades of Color knows all about.

“Business has changed in my years here,” Wood said. “More and more people are shopping online because it’s more convenient than going downtown.”

Although the internet is nothing new, more and more customers are choosing to go shop online.

"I think it takes business away from the individual business owner by doing that (referring to online shopping) it doesn't benefit us, we look at it all the way around," Wood said.

A business that's been around since 1910, Davidson's Clothing for Men specializes in the in-person experience and custom clothing for men. President Larry Davidson’s grandfather first opened the business that has survived an ever changing economy.

While the business now has an online presence in social media, Davidson says online shopping makes business a struggle.

“It puts us at a disadvantage,” Davidson said. "On a regular basis we have people who come in, take our time, look at samples of things we have to offer, check their sizes, so that they can then go online and buy the same item or a similar item. Already they are getting a big discount because they don’t have to pay sales tax"

And when customers shop online, not only are owners like Wood and Davidson losing revenue, the locality is losing sales tax.

In a sit down interview with Mayor Lea, he says lost sales tax revenue from brick and mortar stores is the main reason Roanoke is millions in the red.

"The primary reason is marketplace fairness. I think the fact that revenues has gone down is because people are utilizing the internet, ordering and we are missing that tax revenue,” Lea said.

He along with Davidson, both who are well versed in the Marketplace Fairness Act lingo explain that legislation that would fix the problem has long been ignored by legislators.

So far the marketplace fairness act, which would guarantee that online sales tax could come back to the area either the shopper or the retailer originated from, and essentially solving the issue hasn't passed. Both say Rep. Bob Goodlatte is head of the committee for the piece of legislation. They are hoping he along with other local representatives can soon move the piece forward to level the playing field with local retailers and recoup lost sales tax revenue for local counties and cities.

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