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Taxing News

All good things come to an end--as might the tax-free Internet
February 1, 2000
URL: http://www.entrepreneur.com/article/19020

The money grab is in overdrive. Cities, counties and states, wowed by e-commerce, want their taste of Net profits--namely, the sales tax revenues that government officials say they're losing out on when buyers shop online.

A national Advisory Commission on Electronic Commerce, commissioned by Congress, is busily chewing on these complaints, but for now there's little local officials can do. The Internet Tax Freedom Act, a federal law enacted in October 1998, prohibits for three years imposition of sales and use taxes on Internet access charges or any discriminatory taxes on e-commerce.

E-commerce players are up in arms nonetheless, mainly because the louder the howls get from local officials, the more probable it is that Congress will green-light some type of taxes. Will that stifle the boom in e-commerce? A survey by consumer research outfit BizRate (http://www.bizrate.com) found that 75 percent of online buyers say they'll spend less on the Internet if sales taxes are instituted.

In the meantime, a survey by Stamford, Connecticut, Internet market research firm @plan found 73 percent of active adult Internet users oppose an Internet sales tax, and 58 percent said they believed a sales tax would hurt Internet retailing.

Will government officials get their way with new taxes imposed on Net users? Track developments by logging on to the Congressional Advisory Committee's Web site (http://www.ecommercecommission.org). If you want to speak out on this issue, tell your representative and senators where you stand.

Contact Source

To contact Robert McGarvey, e-mail him at jm@mcgarvey.net.