Local Leaders Worry About Online Shopping’s Impact On Tax Revenue

Black Friday is history, today is the even more profitable Cyber Monday. And like Black Friday, Cyber Monday sales are not limited to just one day. Many retailers will stretch out the online discounts for Christmas, Hanukkah or Kwanzaa for days.

Black Friday still has enough enthusiasts to make the day after Thanksgiving the one when U.S. stores get the most shoppers coming in the door. But Cyber Monday sales have long surpassed Black Friday.

Adobe Analytics, which tracks e-commerce, said U.S. consumers already have spent a record $11.8 billion online before and during Black Friday, marking a 9.1% jump from last year. But Adobe believes the online buying frenzy lasted all weekend with U.S. shoppers spending another $5.5 billion Saturday and $5.9 billion yesterday — before reaching an estimated $14.2 billion nationwide peak today, which would mark yet another record.

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Cyber Monday Hurts Local Tax Revenues

The two retail extravaganzas come this year amidst a battle by cities to change Alabama's Simplified Sellers Use Tax (SSUT), an 8% tax on online purchases It is distributed by the State, with 50% going to state funds and the remaining 50% allocated to local governments (cities and counties).

Tuscaloosa Mayor Walt Maddox is leading the effort of other city chief executives to fight lost revenues to online sales taxes. "Shopping online is ever-increasing and Cyber Monday reflects that fact," the mayor wrote in response to a Townsquare Media inquiry.

"It's common sense that Tuscaloosa sales tax revenues generated from Cyber Monday should stay in Tuscaloosa for our schools, law enforcement, fire department and roads."

Maddox says, "Alabama's current law defies logic and is punitive to cities and counties who have worked hard to grow their communities."

Black Friday and Cyber Monday Generate Billions

Alabama Retail Association (ARA) figures reveal that overall holiday sales rose from $13 billion in 2019 to $18.5 billion last year, with online sales surpassing in-store sales. ARA says retailers in the state still depend on the holidays for about twenty percent of their business, but online sales, combined with higher prices caused by tariffs, are hurting.

Nationally, retail forecasts predict consumers plan to spend approximately $890.49 per person on average this year on holiday gifts, food, decorations and other seasonal items, according to the National Retail Federation’s (NRF) annual consumer survey.

Experts predict that deep price cuts from online shopping today will account for much of that spending, further eroding brick-and-mortar retail sales.

As online deals become the norm, fewer people are lining up outside stores. In-store Black Friday traffic in the US fell by 3.6% this year, according to the NRF, a trend that has local governments concerned.