Internet Sales Tax?
July 8, 2005 – 1:43 pmCharles Cooper wrote an opinion piece over at CNet about the possible imposition of a future sales tax for purchases made over the Internet. It does not appear as though anything is imminent, but moves are being made in this direction that may stick in the not so distant future.
In 1992, the Supreme Court ruled that out-of-state mail order retailers did not have to pay state sales taxes. The Internet was not close to being what it is today back in 1992 and thus was not even mentioned in the decision. Increasing revenues resulting from sales over the Internet are catching the eyes of accountants and legislators across the country, and Mr. Cooper believes the grace period extended to online retailers in the form of tax exemptions may be coming to an end.
I’ve heard such things before and nothing has come of them. Maybe this time it’s for real. Or maybe it’s not.
3 Responses to “Internet Sales Tax?”
I expect that it’ll happen sooner or later, although hopefully it’ll be later. I can certainly understand why lawmakers want to impose such a sales tax. It’s a huge chunk of money and could help out a lot of states that are having budget issues. Do I want them to impose an internet sales tax? From a consumer standpoint, of course not. But from a citizen’s standpoint, increased tax revinue means increased funding for things like schools, scholarships, and other such things that are really important to me.
Personally, I think the biggest issues with issuing an internet sales tax are:
(1) How much should it be? Should it still be less than regular sales tax, so that it doesn’t drive consumers away from purchasing online?
(2) Which state does the money go to? The seller’s state or the buyer’s state? Or both?
and
(3) Does the federal government get in on the deal?
Also, I’d like to point out that this doesn’t make much of a difference to me. Pretty much the only things that I buy online either come from Newegg.com (they charge sales tax if the item is delivered to a state that they have a physical presence in, which includes TN, TX, and CA, so there’s no avoiding sales tax for me) or from Amazon.com (no sales tax, but I only purchase smaller items, so it wouldn’t make much of a difference if they did).
By Adam on Jul 8, 2005 at 5:03 pm
Those are definitely important questions to be asking. It appears as though nothing is imminent, so I doubt we hear much about any answers until some loosely structured piece of legislation actually comes up in committee.
And you’re also right that this goes to the heart of the taxation debate. (e.g. Should there be taxation? How much? On what goods? etc.)
By jjk on Jul 9, 2005 at 2:11 pm
And the problems you mention, Adam, about dealing with fifty states, are just the tip of the iceberg — imagine trying to stay in line with taxation rules for 200 countries. It’s also a big problem when lots of people start using online purchasing as a way around import tariffs. Altogether, it’s going to represent a HUGE problem for online retailers, I fear. Though admittedly, import/export regulations are pretty tricky already, without even getting into taxation. Perhaps the World Trade Organisation needs to put together a system for online retailing for products of less than a certain value?
By Paul.za on Jul 11, 2005 at 10:07 am