Cyber Monday a hit for consumers, bad for city business

Thousands of online retailers boasted deep discounts and free shipping on Cyber Monday.
Thousands of online retailers boasted deep discounts and free shipping on Cyber Monday.

Posted by: Melissa McKinney - bio | email

MONTGOMERY, AL (WSFA) - Making a purchase is now at your fingertips.

Online shopping is quickly becoming the choice for many.

"It's quicker, convenient and it saves a lot of time, too," says Joseph Sheppard.

November 30th wasn't just any Monday.  It was Cyber Monday--the online counterpart to Black Friday.

Online sales were up 11% even before the day's web-sales-blitz.

But many e-sales take much needed tax dollars away from local cities.

Montgomery City Finance Director, Lloyd Faulkner, says online sales tax revenues don't even come close to matching those generated from in store sales.

"Cyber Monday does not create a spike for us," says Faulkner.

It's all because some sites charge tax and others don't.

"If they have a nexus here, nexus being a physical presence here, they're supposed to be paying sales tax here. And the big stores do...but the smaller stores that may not have a nexus here, we're not sure if they are or not."

Combine that with a slow economy and the city's been forced to "cut corners and [trim] here and there," adds Faulkner.

He says it might take a new city ordinance to start collecting from all Internet sales.

And even then, it would be hard to monitor every website.  And it might not even pay off in the long run.

"You can reach the point of diminishing returns.  It can cost you more than you're getting back to do it, so we have to be careful of that too," he says.

But there's good news.  Some folks just aren't interested in e-shopping.

"I've bought some online, but normally I like going in and seeing what I'm buying," says Pike Road resident, Angie McClellan.

"I think it is important that we shop at home, get the sales tax revenue for here in Montgomery, because we certainly need it," says Montgomery resident Sherry Bryant.

Faulkner believes the city could get nearly $3-million dollars a year if it finds a way to monitor all Internet sales and collect past due taxes.

Prattville Mayor, Jim Byard agrees it's too expensive to monitor websites compared to the revenue it would generate.

Montgomery city leaders expect Black Friday sales to be up.

Sales tax collections were down $11-million in the last fiscal year.

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