Retail Hopes from Tax Reform Slip


The BDO Consumer Business Compass recently released a survey addressing the impact of tax reform on the retail sector, and the statistics reveal that the narrative surrounding tax reform and its additional income benefits may not help retail as hoped. In a market where consumers are more interested in experience purchases, this should come as not surprise.


According to the survey, only 30% of consumers surveyed affirmed an increase in their take-home pay resulting from the tax reform, of which 60% plan to spend the extra income on food. Moreover, of the 33% who will receive a tax refund, experience purchases represent 24% of the prioritized transactions followed by entertainment and technology at 22%.


What is also interesting is the South Dakota v. Wayfair case appearing before the Supreme Court addressing online sales tax and ensuring all retailers play by the same set of rules. The survey reveals that only 51% of online shoppers even pay attention to sales tax; however, what many shoppers do pay attention to is shipping costs, particularly when considered to be paid in lieu of sales tax. If an online sales tax is instituted, Amazon stands to benefit significantly from the potential windfall of Prime subscribers signing up for the free shipping option to offset the additional tax.

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