Retailers, Platforms Seek Sales-Tax Exemptions to Bolster Resale Market

A coalition of global fashion brands and digital marketplaces is mounting a campaign to eliminate sales taxes on secondhand clothing, according to a report June 30 from Retail Brew. The group argues that taxing items at the point of resale constitutes “double taxation,” as the government already collected sales tax when the garments were originally sold as new.

The initiative, spearheaded by the U.K.-based Ellen MacArthur Foundation, includes major industry players such as H&M, Primark, Lacoste and Stella McCartney, along with resale platforms ThredUp, Etsy, and The RealReal. The effort is part of a broader strategic push to transition the apparel industry toward a “circular economy” by making the resale of used goods more competitive with the production of new ones.

“Used goods have already been sold once in the stream of commerce, so the government has already collected taxes on the item,” Alon Rotem, chief strategy officer at ThredUp, told Retail Brew. “It shouldn’t be taxed twice.”

The coalition is also advocating for lower labor taxes for jobs integral to the resale sector, such as warehouse sorters and repair workers. Unlike traditional mass production, which benefits from economies of scale, the foundation notes that the resale model is inherently labor-intensive. Sorting and mending 100 used items requires significantly more manual effort than manufacturing 100 new ones, creating a price disadvantage for circular business models.

Proponents argue that tax relief could incentivize the onshoring of jobs. Rotem suggested that reducing the wage tax burden by 20% to 30% would allow companies to expand domestic operations or increase wages. ThredUp, for instance, employs about 2,000 people at distribution centers in Pennsylvania, Georgia, Arizona, and Texas.

The movement follows similar advocacy efforts elsewhere; in 2024, Ikea Canada launched a petition that exceeded 36,000 signatures to eliminate taxes on secondhand items. Leyla Ertur, chief sustainability officer at H&M Group, stated that addressing these fiscal barriers is “one of the fastest and most concrete ways” to scale circularity within the global fashion industry.