With the ongoing pandemic and accompanying economic uncertainty, many Americans are hanging on by a thread mentally or financially. The last thing struggling Americans need is anything that makes life more inconvenient or expensive. Yet state and local governments across the country are poised to do both through new taxes on delivery boxes.
A commission formed by Pennsylvania Gov. Tom Wolf, a Democrat, “is considering recommending a new source of revenue by charging a package delivery fee of 25 cents to $1 paid for every package delivered in the state by e-commerce giants Amazon, FedEx and UPS as well as local grocery stores and restaurants,” the Pittsburgh Post-Gazette reported last month.
The idea is that delivery vehicles create additional wear and tear on the roads and thus e-commerce prices ought to reflect that. It is expected that several other states and municipalities will follow close behind.
As the pandemic rages on and Americans brace for an uncertain autumn in the face of new variants of the Covid-19 virus, the idea of a new tax on deliveries adds insult to injury. For starters, pandemic-induced shortages combined with fiscal stimulus are creating inflation. In effect, Americans are already feeling an additional tax on the goods they need.
It’s a tenet of public policy that if you want less of something, tax it. If we want Americans to continue to do as many things as they can from the safety of their own homes, then taxing deliveries is an absurdly counterproductive public health idea.
While the vaccines are a welcome miracle, there remains enough community spread of the virus to give pause to older Americans and those who cannot take the vaccine, such as the immunocompromised, before they venture out to stores and restaurants. The idea that these most vulnerable among us, many on fixed budgets, ought to pay a new tax is outrageous.
Undoubtedly some are pushing for delivery taxes to support brick-and-mortar retailers and restaurants once the pandemic is behind us. But the answer to today’s temporarily uneven playing field should not be to permanently tilt it the other way.
E-commerce services like Amazon and UberEats are undoubtedly convenient. That said, whether it’s the service of restaurants or the ability to see, feel, and take ownership of a product instantly, there are plenty of inherent advantages to the brick-and-mortar experience that e-commerce will never be able to replicate. Physical stores don’t need a new, permanent tax advantage.
Even beyond the context of Covid, the justification for a new package tax just doesn’t hold water. States and localities are looking for new sources of revenue to fund roads as gas tax revenues continue their relative dwindle spurred by Americans purchasing more fuel-efficient and alternate fuel vehicles.
Yet, as fiscally reckless as it is, Washington has infused states and local governments with a record amount of cash over the last year for all sorts of projects with relatively few and lenient strings attached. For example, West Virginia is using CARES Act funding to make improvements to roadways despite the fact the funds aren’t specifically appropriated for that purpose.
Money is fungible, and federal cash infusions for one purpose will liberate funding for roads. Meanwhile, bills appropriating funding more specifically for roads are already working their way through Congress. At the end of the day, Americans will already face a steeper tax burden to cover road improvements and the rest of Washington’s largesse.
There’s also a more fundamental problem with package tax plans. The key justification for these proposals, that delivery vehicles are creating unacceptable wear and tear on the roads, doesn’t pass the smell test.
For starters, there’s no difference in this respect between a family going to a restaurant and a meal delivery. In fact, most drivers make multiple stops. While some additional heavier delivery vehicles may be on local roads, every single package in one delivery vehicle represents an entire additional vehicle that is not on the road.
One Amazon, UPS, FedEx, or Postal Service van usually means hundreds of cars not on the road. Widespread private deliveries result in untold environmental and safety benefits that more than offset marginal road wear and tear (if there are any).
No matter how it’s delivered, the logic behind a package tax just doesn’t add up. All that is adding up for taxpayers is the cost of Covid-19 and the recent spending explosion from Washington. Don’t ding taxpayers at the doorbell too.