More Broadband, Less OK Tax Revenue?

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

As we’ve reported, there’s a concerted effort among Oklahoma politicians, retailers and business leaders to pressure federal lawmakers to pass a bill requiring Internet retailers to collect taxes for online purchases.

Internet commerce is growing. Budget-crunched state and local lawmakers here in Oklahoma want a piece of the action, and brick-and-mortar retailers want to end what they say is an unfair business advantage.

But could online shopping actually diminish the local tax base in Oklahoma?

Two Oklahoma State University researchers asked that very question in a study published in Regional Science Policy & Practice.

The April 2011 report by Brian Whitacre, associate professor and extension economist, and Lara Brooks, then an assistant extension state specialist, compared broadband Internet “adoption” levels and per-capita retail sales tax collections in each of Oklahoma’s 77 counties.

“Tax collections have not varied in any way based on broadband adoption trends,” the study concluded.

Some counties with high broadband rates experienced growth in tax collections, while others saw declines.  Similarly, counties with low rates of broadband adoption showed both improvements and drops in tax collections, without any apparent pattern.

The report (read an online version here) found that just two variables were “statistically significant” to retail sales tax trends in Oklahoma during the decade studied: tax and poverty rates.

The higher rates of taxes contributed to higher tax collections, while the higher poverty levels in 2008 decreased the levels of tax collections.

The growth of e-commerce over the next 10 years could change the study’s findings, Whitacre and Brooks wrote.

While Oklahoma’s brick-and-mortar retailers are increasingly worried about losing sales to Internet-only operations, the broadband study cited surveys from BIGresearch, comScore and Forrester that have found many consumers use the web to “research online, buy offline.”