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New York Lawmaker Floats a Scrooge Tax on Online Shopping

3 min readBy: Jared Walczak

Just in time for the holidays, one lawmaker wants to taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. New York City residents $3 for every package they order online, excluding food and medicine. The legislature wouldn’t be able to take up the idea in time to turn it into a Scrooge Tax on gifts mailed to friends and family this holiday season, but there’s still something humbug about the whole idea. It’s a tax on every New York City resident who would prefer not to spend too much time in crowded stores during a pandemic and who benefits from the low prices and convenience offered by many online retailers. It’s a tax that hits Jacob Marley far worse than Ebenezer Scrooge.

In an op-ed in the New York Daily News, Assemblyman Robert Carroll (D-Brooklyn) and Transport Workers Union President John Samuelson write of a “delivery siege” that will “only get worse.” (The tax would benefit the Metropolitan Transportation Authority, hence Samuelson’s interest.) They write of the scourge of delivery vehicles and their emissions, though even in New York City, not everyone dissuaded from purchasing online will take the subway rather than driving (far worse for both congestion and emissions). And for many residents, that supposed “delivery siege” is a lifeline in uncertain times.

“A delivery surcharge would incentive some consumers to patronize neighborhood businesses instead of reflexively ordering items online from Amazon, Walmart, Etsy or eBay. They might be reminded how local mom-and-pop stores, and bigger retailers like Bloomingdale’s and Macy’s, are part of what makes a city dynamic, diverse and interesting,” the two write, though it is not immediately clear why Bloomingdale’s is inherently more virtuous than an Etsy shop.

And while a tax of $3 per package may hurt Amazon and Walmart indirectly, it’s really a tax on the people who benefit from the competitive prices and convenience those and other online retailers often provide. Low-income earners who take extra trips, during a pandemic, to shop in person at potentially higher prices to avoid a $3 per package tax are not better off for being “reminded” of the options they were already able to weigh when they decided to purchase online.

If the tax succeeds in reducing online purchases, it will not generate the projected revenue. If it fails to shift many additional purchases to brick-and-mortar shops, it merely penalizes New York City residents for shopping online during a pandemic.

Even when purchases are still made online, such a tax could have unintended consequences. A per-package tax favors large retailers over smaller niche ones: Amazon can consolidate your books, electronics, clothing, toys, and household items in a single box, whereas ordering items separately from multiple retailers would incur additional taxes. Proponents of the tax might consider that good—it is better for the environment—but pushing people toward a small number of large retailers is inconsistent with the stated secondary goal of urging people to frequent more small businesses.

According to Carroll and Samuelson, an estimated 1.8 million packages are delivered to residences in New York City every day, and there’s extraordinary efficiency and convenience in that. That people of all income levels have unprecedented access to a staggering array of goods at affordable prices is a triumph, not a tragedy. Sermonizing on materialism has its place, but not from government officials. It is emphatically not the role of government to wield taxes with the intention of constraining consumer choice and driving up consumer costs. If the tax burden itself is considered a perk, not a necessity, then it’s a sin tax—and if New Yorkers staying home more during a pandemic is a sin, it’s one for which very few are ready to repent.

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