Customers Demand a Temporary Halting of State-Imposed Delivery Charges for Retail Goods
Americans are bracing for increased expenditures as major retailers prepare to raise prices due to President Trump's tariffs. An additional, less vocal threat to consumers' wallets is emerging: a mishmash of state and local retail delivery fees that function as hidden taxes on everyday purchases. The absence of federal regulation on this issue could lead to a rapid expansion of these fees, making it more expensive for Americans to buy a variety of goods, from groceries to school supplies.
In early 2023, Maryland Governor Wes Moore suggested a 75-cent fee on all retail deliveries to boost state revenues. This proposed fee would apply to companies with retail sales of $500,000 or more, encompassing not just online purchases of merchandise, but also food deliveries from platforms such as DoorDash, Uber Eats, and GrubHub. Although the Maryland legislature failed to include the fee in this year's final budget, the prospect of such a fee remains concerning, with growing possibilities that more Americans may face similar charges in the future if Congress does not intervene.
Two states, Colorado and Minnesota, have already implemented legislation charging retail delivery fees. Colorado began imposing a 27-cent fee per delivery in July 2022, which later increased to 29 cents, and applies to all motor vehicle deliveries in the state that include at least one item subject to state sales and use tax. Only businesses with retail sales under $500,000 in the previous year are exempt. Minnesota introduced a 50-cent delivery fee on orders of $100 or more from retailers with $1 million or more in sales. However, certain items, such as drugs, foods, and baby products, are exempt.
In addition, states such as Hawaii, Mississippi, and Indiana have put forward bills proposing retail delivery fees, and Nebraska, New York, and Washington have floated similar proposals.
State legislators are turning to retail delivery fees in response to declining gas tax revenues, which has been attributed to the adoption of more fuel-efficient and electric vehicles. Proponents argue that these fees are a fair way to offset the resulting shortfall. However, it is questionable whether online shopping adds more wear and tear to roads. In fact, consolidated delivery routes can lower the number of individual trips to stores, potentially reducing road congestion. Furthermore, delivery vehicles already contribute to road maintenance through gas taxes and vehicle registration fees.
Moreover, targeting retail deliveries with a special surcharge is neither an equitable nor sustainable solution. A more rational alternative is a vehicle miles traveled (VMT) fee, which would charge drivers based on the distance they travel, applying equally to all vehicles within the same weight class.
Critics argue that retail delivery fees represent a regressive tax, disproportionately affecting working families and those reliant on deliveries, such as many people with disabilities, residents who cannot drive or do not have a vehicle, immuno-compromised individuals, and those living in food deserts. Additionally, these fees deter online shopping, which often offers consumers greater convenience, affordability, and environmental friendliness.
If Congress wishes to protect American consumers from an escalating patchwork of hidden charges on everyday purchases, it should consider enacting a Retail Delivery Freedom Act, imposing a 10-year moratorium on discriminatory state and local fees. This legislation would save families money during a time when budgets are already stretched thin, preserve consumer choice in shopping methods, and ensure that essential deliveries remain affordable. By preventing this growing burden on household finances, Congress can safeguard both consumer wallets and the innovations vital to making modern shopping more convenient, accessible, and environmentally friendly for all Americans.
- The prospect of retail delivery fees, such as the one proposed by Maryland Governor Wes Moore, could lead to a nationwide trend and result in increased expenses for American consumers across various business sectors, including groceries and school supplies.
- As more states consider implementing retail delivery fees, policymakers should evaluate the social and economic impact of these fees on different demographics, including working families and those with disabilities, who may heavily rely on deliveries.
- To address the revenue shortfall due to declining gas tax revenues, an alternative to retail delivery fees is the vehicle miles traveled (VMT) fee, which would charge drivers based on the distance they travel, ensuring equal treatment for all vehicles in the same weight class.
- In light of increasing retail delivery fees and their potential impact on American families, Congress may consider enacting the Retail Delivery Freedom Act, imposing a 10-year moratorium on discriminatory state and local fees, thereby preserving consumer choice and safeguarding essential, affordable deliveries, while promoting innovation in the AI and general-news sectors.
