Sales Tax on the Internet

A Level Playing Field

It has finally happened. Brick and morter merchants, shopping mall operators, book store chains, real estate developers are whining about the perceived threat of the internet and e-commerce to their profit margin.

Stranger yet, they have allied themselves with state and local governments concerned about the loss of sales taxes.

Catalog and mail order sales companies have been pestered by states attempting to collect sales tax on products shipped across state lines. Most states have imposed a little-known, and unenforceable usage tax that requires the consumer to pay tax on items for which the retailer has not collected sales tax.

The U.S. Congress passed a law that products ordered on the internet include the sales tax of the recipient's locale. Terrific burden on a company to keep records of tax rates in over 7,000 localities. You're thinking only 50 states? Wrong. Sales tax in Virginia, for instance varies from 5 1/2 percent in Arlington County to 6% in Fairfax.

Luckily, most internet companies are ignoring it. Hewlett Packard charges the tax based on where the product is shipped. Perhaps they even remit the collected tax to the state. Hopefully, their bookkeeping software is sophisticated enough to handle it.

The strange alliance of governors, mayors, and brick and morter merchants is still at a loss as to how to collect sales tax on e-commerce. They recently held a lengthy press conference stressing the loss of sales tax revenues depriving funds for schools and roads and other government services. (sob) They seem to expect us to believe them. The merchants used the "level playing field" phrase ad nauseum. No mention now of fair competition that the Department of Justice is pestering Microsoft with.

So will the low-tech merchants level the playing field?

Will the consumer ultimately benefit as they promise? (A politician's promise? Really?)

Will the Federal Government, ever-eager for a new source of revenue, find a way to tax the internet?

Can we poor over-taxed peasants do anything to prevent it?

Share your opinion. Editor