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Senate approves online sales tax. Is it fair, or a tax increase?

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But conventional retailers, such as department stores and discounters such as Wal-Mart, as well as state governments looking for additional tax revenues, are urging the House to pass the legislation. They say it will “level the playing field” between themselves and Internet-only companies that have not charged sales tax in the past.

“This legislation is all about fairness,” says Michael Kercheval, president and chief executive officer of the International Council of Shopping Centers. “When lawmakers debate this bill, they usually start by saying, ‘I understand this is not fair and something needs to be done about it.’ ”

He says software now makes it possible for retailers to calculate sales taxes – which vary from state to state and city to city – just as easily as they calculate shipping charges. The law mandates that each state make sales tax software available free of charge to e-commerce businesses.

Most states would be happy to see the law enacted because they see a large pot of money that has not been collected in the past. A 2009 University of Tennessee study, based upon economic forecasting, projected unpaid sales taxes from Internet sales would amount to $23 billion in 2012.

“Closing the loophole will actually bring back jobs to bricks-and-mortar businesses, and the sales tax collected will bring new revenues into communities,” says Mr. Kercheval in an interview.

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