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I believe that sales taxes should be collected on purchases made through the Internet. However, I support the continuation of the current moratorium on such taxes pending a serious study of how they can be made reasonable and uniform, along with tax rules for all remote sales like catalog transactions. Most projections on the future of electronic commerce suggest that retail sales on the Internet will be $20-38 billion by next year. That's a lot in terms of expanding the attractiveness of the Internet to consumers, but not that much in terms of sales tax revenues, given the current structure of federal, state, and local tax laws. The current, highly restrictive rule on state taxation of mail and phone sales is already shrinking the tax base for all sales taxes as retailing continues to migrate from stores to catalogs. Congress has been deaf to state and local government requests for federal preemptive legislation to change the rules or simply allow them to treat the purchaser’s residence as the point of sale for tax purposes. My primary concern is to ensure that state and local governments, which rely on sales taxes for about 40 percent of their combined revenues, are not shut out of e-commerce as a tax base, much as they have already been shut out of many catalog sales. Continuing the current moratorium for a reasonable period of time would give policymakers at every level of government the opportunity to assess the growth of the digital economy and evaluate fair and effective means for taxing electronic commercial activities. |
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