Norton Introduces Bill Allowing Sales Tax at Federal Gift Shops

WASHINGTON, D.C. – Congresswoman Eleanor Holmes Norton (D-DC) has introduced a bill to allow state and local governments to impose a sales tax on purchases at gift shops on federal property.

“At a time when local economies are struggling due to the coronavirus pandemic, this bill will generate vital tax revenue. It will particularly help D.C., which hosts many federal gift shops but doesn’t currently receive tax revenue from sales at these shops,” Norton said.

Norton’s introductory statement for the bill is below.

Statement of Congresswoman Eleanor Holmes Norton

On the Introduction of the Federal Gift Shop Tax Act

December 9, 2020

Ms. Norton.  Madam Speaker. 

Today, I rise to introduce the Federal Gift Shop Tax Act, which would allow state and local governments to impose a sales tax on purchases at gift shops on federal property.  These governments would be able to generate millions of dollars in new revenue at a time when they are struggling to meet their budgets because of the economic crisis caused by the coronavirus pandemic.

When the federal government engages in activity that is not inherently governmental, such as operating a gift shop, there is no reason to exempt customer purchases from a sales he items sold at federal gift shops, such as jewelry, apparel, accessories, games, books and décor, would be subject to sales tax if sold on private property.  Customers are often unaware of this sales tax exemption when shopping at gift shops on federal property, so the introduction of a sales tax is unlikely to have a significant impact on gift shop sales.  It would, however, create a valuable revenue stream for struggling governments.  In addition, state and local governments often provide uncompensated services to federal property, such as fire service, and allowing them to impose a sales tax on gift shops would allow them to recoup some of those costs.  This bill is of particular importance to the District of Columbia, as it is home to a number of gift shops on federal property, such as at the Smithsonian Institution, the National Gallery of Art and the John F. Kennedy Center for the Performing Arts. 

State and local governments have taken the lead in combating the pandemic, meeting the moment with expanded services and support even as they lose significant revenue.  This bill would give these governments an opportunity to make up a portion of their budget shortfalls by creating this new revenue stream.

I strongly urge my colleagues to support this bill.