Cities all over the state of Mississippi will soon see a new source of income. Municipalities will begin seeing the diversion of internet sales tax in August 2019.
According to District 25 Rep. Walter Michel, the amount of money that cities will receive is based on a two-part formula, which will factor in the percentage of sales tax generated by each city and its population. “What we did was take the ranking of the cities,” Michel said. “The diversion of that use tax will be shared with the cities based on the percentage of sales tax and population.”
Michel said Madison and Ridgeland will see a large return from the diversion of internet sales tax.
“Both are retail hubs,” he said. “They generate much more retail than is common for cities that size. They will benefit greatly from this formula. As use taxes go up in the future, they will benefit.”
He added that it is important that they keep their retail sales on the grow. “Jackson has seen a steady decline,” Michel said of sales tax in the city.
Kathy Waterbury, the associate commissioner for executive and enforcement services with the Mississippi Department of Revenue, said they do not currently have any preliminary numbers for what the municipalities will receive.
Ridgeland Mayor Gene McGee has been vocal about the need for internet sales tax diversion back to municipalities.
Many cities are feeling the effects of the growing e-commerce industry and the lack of sales tax revenue being returned to the cities where the purchases were made.
This change will affect Madison County cities greatly, as they rely on sales tax revenue. That money allows local government to pay for police and fire protection, roads, sewer, garbage, libraries, jails and much more. Mayor McGee has said that it also allows the city of Ridgeland to avoid rising property taxes.
Sellers are now required to collect tax on items purchased online, which could bring $100 to $200 million into the state due to online purchases.
McGee has said the city brings in around $13 million on average each year in sales tax, which made up 52 percent of Ridgeland’s general fund for 2018 and 48 percent of estimated actual expenditures for the general fund for 2018.
