In some states, your Amazon toilet paper order or your DoorDash fried rice may have gotten a little more expensive. And the hope is that you won’t notice. While consumers have become accustomed to companies dealing with hidden chargesThe latest generation of bill increases are coming from government taxation, usually local or state.
For example, in recent years, Minnesota and Colorado have imposed fees on all deliveries. In Colorado, the fee is 28 cents, and in Minnesota, it is 50 cents for orders over $100. Some people derisively call these fees “doorstep taxes”.
Other states — some solid red, others deep blue — are studying doing the same.
These states include Nebraska, Ohio, Hawaii, Maryland, Mississippi, Nevada, New York and Washington, which are evaluating proposals that would charge fees ranging from 25-75 cents per transaction. Colorado’s fee – which has survived repeal efforts – is expected to generate $5 billion in revenue over the next decade.
Adelphi University’s Robert B. According to Mariano Torres, chair and professor of finance at Willemstad School of Business, hidden service, security, “convenience” and other fees have become increasingly common and will become even more so. He argues that this is happening as “our once productive economy has turned into a rentier economy in which monopolistic companies extract money from consumers, precisely because they can.”
But what surprises him, Torres said, is the move by state and local governments to do so, “which reverses the recent trend.”
“Minnesota and Colorado are getting in on the action, which shows that even corporate monopolists don’t have a monopoly on rent collection,” he said.
He further said, it is most important for the consumer to understand that the “stealth fee” is simply an additional, albeit hidden, tax that the government is charging.
Other tax experts aren’t surprised, saying it represents an easier outcome for the cash-strapped state budget.
“If you’re a legislator, you’ve learned that the easiest way to fund the government is through sales taxes or fees,” said Mike Bernard, chief tax officer at tax technology company Vertex.
Bernard says people consistently avoid higher property taxes, and income taxes are too variable, so there is one primary legislative lever left to pull: a fee or tax. But legislators also see the broader societal shift toward the distributed economy and feel it is a valid tool to use.
“From a policy standpoint, states feel like if a person won’t get in their car and drive to the store and pay sales tax on gas, if that person doesn’t do it and a UPS truck does it instead, we still need money to pay for the infrastructure,” Bernard said.
Other fees increasingly being imposed by governments include recycling fees for electronic goods.
“Most jurisdictions will charge you because at some point you will try to recycle your cell phone,” Bernard said, leaving an electronic swamp to dispose of, “and it’s easier to collect the fee upfront.”
Municipalities have the authority to levy fees and other charges from a number of state statutes that authorize them to perform specific regulatory functions or provide specific public services and improvements, such as roads, parks or emergency services like 911.
‘Neighborhood charges’ are also increasing frequently at airports
Port authorities are also increasingly imposing tariffs on products purchased at the airport. Airport concessions have long been subject to sticker shock, so the latest charges are an extension of that.
“You can go to Starbucks at the airport and find that the airport authorities are charging an extra quarter,” Bernard said. He said it’s known in industry parlance as a “neighborhood fee.”
“You’re in their neighborhood so they’ll charge extra,” says Bernard.
For example, Philadelphia International Airport began adding a 3% surcharge on all concessions last year.
In 2019, when Bernard started at Vertex – which tracks these types of fees – there were 400 such fees imposed by various entities across the US, today there are 1,400 and the company expects that number to keep growing.
“People won’t back down and the states know this,” Bernard says, adding that the average person just wants their stuff quickly and fussing about extra charges isn’t worth it and, in many cases, people don’t even notice it unless they study their receipt.
But some experts see these infrastructure elixirs as bad financial medicine.
“Hidden taxes like retail delivery charges are a short-term solution, not a long-term solution,” said Arjun Mahadevan, CEO of tax preparation firm Doola. “While they can help states close budget gaps, they also increase friction and reduce consumer confidence.”
Especially for entrepreneurs and small businesses, these hidden fees create uncertainty in pricing and customer experience.
“As consumers become more accustomed to fees in other industries, states could move down this path, but it risks having an adverse impact on businesses that drive innovation and growth,” Mahadevan said.
Big tech is pushing back
Amazon, Doordash, alphabet, grubhubAnd instacart He is one of 34 corporate partners in the Chamber of Progress, a tech industry policy coalition that opposes the push toward a doorstep tax. Hope Ledford, director of civic innovation policy at the chamber, says the taxes are regressive and states have other ways to raise revenue.
“When we first looked at delivery taxes, it was clear who was hurt the most: families living paycheck to paycheck. Too many families rely on delivery, and these families are already operating with thin margins,” Ledford said. “We see that these taxes make life more expensive… We see it as an essential service.”
He said many elderly or disabled residents who live in food deserts rely on delivery services for medicine or food.
Despite these concerns, research shows Higher income consumers and younger consumers are more likely to shop onlineDoing this for convenience. Research from Capital One Turns out that households with incomes of $50,000 or less account for the smallest share of online shoppers.
But a spokesman for the tech trade group said something else: “Delivery taxes are not a real solution and they are ineffective, a Band-Aid on a wounded state budget. They don’t come close to solving the problems they’re trying to address,” he said.
However, lawmakers see the fees as a hedge against continued conversion to EVs and declining gas taxes, which have helped finance larger projects, as well as a way to regulate the rapidly expanding delivery ecosystem.
New York State Assemblyman Robert Carroll, who represents Brooklyn, said that while research shows more affluent consumers are more likely to shop online, $3 wouldn’t break the bank, and such a fee could be a boon for the state’s infrastructure budget. For several years he has been supporting a $3 delivery fee for most items delivered to New York City residents, along with exemptions for food, medicine and infant formula.
Carroll said, “We wanted it to be a high enough fee to cause a change in behavior. We’re trying to make people more thoughtful consumers and making sure the packages are delivered together.”
Carroll said that with more than two million packages delivered daily in New York City, the fee would be a boon and would significantly reduce the burden on the city’s poorest residents.
“Unregulated, unregulated online delivery and fulfillment centers, with 24-hour truck traffic and waste, is not sustainable. We want to be sustainable,” Carroll said.
He first proposed the idea in 2019, but he hopes now is the time for the fee.
Leading New York City mayoral candidate Zohran Mamdani has proposed making bus transit free, something Carroll said could be funded through a tax.
“It will cost $600 million a year. Our bill will pay for it,” Carroll said. However he insisted that there had been no formal talks with the Mamdani campaign team regarding his proposal.
The Mamdani campaign did not respond to a request for comment by press time.
