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Report  |  August 2024

The Negative Economic Impacts of Retail Delivery Fees

By Nam D. Pham, Ph.D. and Mary Donovan

Overall, retail delivery fees are a new way for state governments to raise consumption taxes. While state governments look at these fees as a source of income, they cover only a small fraction of budget shortfalls. Retail delivery fees are a form of regressive tax, so they negatively affect lower-income populations more than higher-income populations. With higher taxes, consumers cut back on consumption, which in turn hurts the economy, especially small local businesses. If all states follow Colorado and Minnesota to impose retail delivery fees, the tax revenue generated will come at the expense of consumers and destroy jobs.