Stillwater News

How to solve Oklahoma’s $215 million deficit? It’s an easy fix.

Released:Nov 14, 2017

City Manager
Norman McNickle

Opinion-Editorial by Norman McNickle, Stillwater City Manager

Oklahoma has a $215 million deficit. That is a big number. You know what is also a big number? The amount of sales tax that is not collected on online purchases that Oklahomans make each year. It’s estimated that about $250 million in sales tax is owed to the State of Oklahoma every year. Since 2011, the State of Oklahoma could have collected at least $1.35 billion in sales tax for online purchases. This could have been used to fund teacher pay raises, to provide health services and to make much needed infrastructure improvements.

Right now, state law says that if a business has a brick-and-mortar building in Oklahoma it must collect sales tax. However, large online retailers like Amazon are not required to collect sales tax for Oklahoma—though they do in Colorado and Louisiana. According to eMarketer, the top 25 U.S. online retailers made a total of $159 billion off of purchases in 2016.

That’s another big number.

You know what’s another big number? In 2017, more than 10 retail stores in Stillwater closed their doors. Part of the reason is that online retailers have an 8.813 percent advantage over brick-and-mortar retailers because they don’t collect sales tax. This is unfair—the law should be enforced fairly.

In Stillwater, people pay 8.813 percent in sales tax on their purchases. Of that number, Stillwater receives 3.5 percent; Payne County receives 0.813 percent; and the State of Oklahoma receives 4.5 percent.

Online sales tax (also called use tax) is not a new tax; rather, it’s a tax that is not being collected. Your state income tax has had a line item for use tax since the 1980s. Not paying it is technically tax evasion.

Instead of placing the burden on Oklahoma residents to remember to pay use tax on their income tax, I’m calling on Oklahoma lawmakers to pass a bill similar to the ones that Colorado and Louisiana passed. These bills require online retailers to collect and remit sales tax on behalf of the states at the time of purchase. The 10th U.S. Circuit Court of Appeals, of which Oklahoma is under, upheld the Colorado law, and the U.S. Supreme Court even declined to hear the appeal.

Last year, Stillwater had to cut its annual operating budget by $13 million. I believe that if we received the 3.5 percent sales tax on online purchases, we would have received that $13 million.

I also believe that if the State of Oklahoma received its 4.5 percent sales tax on online purchases, it would have enough money to fix that $215 million deficit.

This is an easy fix. Seriously, pass a law similar to Colorado’s, and let’s get out of this hole.

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