Why We Won't See a Sales Tax in Delaware

The pain from the proposed 8 percent pay cut for state workers has some people talking seriously about imposing a sales tax, which is close to heresy in Delaware. The reason most often cited for not instituting a sales tax is to keep Delaware's competitive advantage. But there's another reason why I don't think we'll see a sales tax adopted in Delaware: the state isn't equipped to collect it.
The Wilmington area yellow pages on my desk runs to 1,248 pages. Each of those business would have to be given rules, procedures and forms for reporting and collecting the tax.
The Revenue Division has 204 budgeted positions. These employees are kept busy collecting the personal income tax, the corporate income tax, the franchise tax, the gross receipts tax, the bank franchise tax, the public utility tax and more. Imposing a sales tax would require the state to hire new staff, find new office space, establish new procedures and set up new information systems to collect it—a daunting task, even if the political will were there to do it. Increasing an existing tax is easier than setting up a new tax.