Government considering tax on Internet purchases

The U.S. government is currently brainstorming over a bill proposed earlier this year, suggesting all states should be encouraged in their efforts to tax online sales.

This would mean all purchases made online would cost extra, in addition to shipping and handling.

"They tax us enough already," sophomore Joy Rhoades said. "If it's a good business already without taxes, then why add taxes and make the business decline?"

Under a 1992 Supreme Court decision, states cannot require out-of-state retailers, such as catalog companies, to collect sales taxes unless they have a physical presence in the state. That exempts most Internet companies and other mail-order firms from having to charge a sales tax.

Internet retailers have said it is impossible to keep up with the local and state tax codes across the United States, which totals up to more than 7,000 different taxing jurisdictions.

Rhoades said the tax could affect the online shopping trends tremendously.

"I don't think people would buy much," she said. "Adding taxes are just like buying at a regular store. It would defeat the purpose of online shopping."

According to a recent study, state and local governments will lose $13 billion in sales tax revenues in 2001 due to difficulties collecting taxes on rising volumes of Internet transactions. Wyoming governor Jim Geringer warned that without such a tax, states stand to lose annual revenues topping $30 billion by 2003.

The majority of the nation's governors and local state officials are in favor of an Internet sales tax, with revenues short and the economy being down due to the Sept. 11 attacks.

"Nobody likes taxes, but if we have to pay them, everyone should pay them," Utah governor Mike Leavitt said in a news briefing. "This is very much an equity issue."


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