A government panel studying whether Internet sales should be taxed is so divided over the issue that it’s now turning to the states for help in solving the problem.
The 19-member Advisory Commission on Electronic Commerce, unable to reach agreement on any specific course of action since its creation last year by Congress. Wednesday it unanimously agreed to ask state tax officials to suggest ways of simplifying the existing hodge-podge of state and local sales taxes on mail-order sales so the taxes can apply to Internet sales as well in time for its December meeting.
Utah Gov. Michael Leavitt (R) suggested the move saying that the panel, scheduled to file its recommendations to Congress next spring, has “to figure out if there is a workable solution” to the tax problem that is simple, acknowledges states’ rights, doesn’t impose any new taxes and protects taxpayer privacy. Turning to the states for help, he added, would help to achieve that goal.
There was no immediate comment from various state tax officials on the request which came one day after 35 members of Congress, led by House Majority Leader Dick Armey (R-TX), expressed concern in a letter to ACEC Chairman, Virginia Gov. James Gilmore (R). The letter said that the panel was spending too much time on how to tax Internet sales instead of trying to see if it should be taxed at all.
Gilmore would not comment on the letter.
Meantime a third study on the potential effect of taxes on Internet commerce has been released. The study, conducted by BizRate.com, a Los Angeles-based collector of Internet transactional information, found that 75 percent of the 7,000 online buyers polled said they would buy less if Internet sales were taxed and nearly half would not have made any purchases if they had to pay a tax.
The two other studies, prepared by the Gallup Organization and @plan, an online market research firm, and Fabrizio-McLaughlin and Associates for the Information Technology Association of America (ITAA), found that most Americans oppose taxing Internet sales even if it meant their state and local governments would lose significant tax revenues.
And, nearly 40 percent of those surveyed said they would be less likely to vote for any political candidate favoring an Internet sales tax.
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