TAXING INTERNET SALES

March 2000
		Should sales over the Internet be taxed like purchases in retail stores? James Gilmore, governor of Virginia, and Mark A. Murray, state treasurer of Michigan, respond to your questions.

Forum introduction Why aren't Internet sales treated the same as catalogue sales? Explain how doing business over the Internet is different than doing business over a fax machine, land-line telephone or wireless phone. Is the technology and market too new and fragile to burden with taxes? What will happen if Internet sales are taxed? Will Internet use go down and commerce decline, on- and off-line? Do proposals expect e-tailers to collect sales tax only for the jurisdiction where their warehouse is? How can Internet sales tax be levied in a uniform way that can be distributed fairly? Is it possible that a direct tax on delivery of goods, required to be collected by UPS or FedEx, would work?   Dec. 17, 1999 Taxing Internet sales Online Special The New Internet Economy Dec. 25, 1998 Cybershopping. Sept. 7, 1998 Online entrepreneurs Sept. 7, 1998 Net profits Dec. 29, 1997 Virtual showroom July 1, 1997 Digital dollars June 11, 1997 Online privacy Browse the NewsHour's coverage of cyberspace and business.

According to a 1992 Supreme Court decision, retailers do not have to collect sales taxes when they ship goods into states were they don't have a substantial physical presence, such as a retail store. And so many online retailers don't collect sales taxes on their sales via the Internet. A 1998 congressional act put a three-year moratorium on new Internet taxes. With the explosive growth of e-commerce sites, however, has come an increasingly heated debate about the future of Internet taxes. Most governors and state officials favor an Internet sales tax, fearing that without it, they could lose up to $10 billion a year in revenue. Others -- including some state and federal officials -- argue that taxing Internet sales will stifle economic growth fueled by online purchases. Internet taxation has been a hot topic on Capitol Hill. Legislators have introduced several bills dealing with the issue. Several members of Congress, including Sen. John McCain, are pushing a bill that would permanently ban states from imposing sales taxes on e-commerce. Other legislators want to wait they know more about the Internet's impact on state government revenue. Sen. Ron Wyden, D-Ore., and Rep. Christopher Cox, R-Calif., have said people on both sides of the debate think the current ban on new Internet taxes should be extended indefinitely. The temporary ban expires in October 2001. The law enacting the ban also created a congressional Advisory Commission on Electronic Commerce to recommend future tax policy for the Internet. Its recommendations are due in April. Virginia Gov. James Gilmore heads the commission. What do you think? Should Internet sales be taxed? Should e-commerce be allowed to grow in a tax-free environment? James Gilmore, governor of Virginia, and Mark A. Murray, state treasurer of Michigan, take your questions about taxing sales over the Internet.