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 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.     Advisory Commission on Electronic Commerce Internet Tax Fairness Coalition National Tax Association The E-Freedom Coalition

Jon Larrabee of Houston, Texas, asks: Is it possible that direct tax on the delivery of the goods, required to be collected by UPS or FedEx, will be the means by which e-commerce ultimately is subjected to effective taxation?   Mark A. Murray responds: In Michigan, we would advocate the Zero Burden Tax Collection System, proposed by the National Governor's Association, the National Council of State Legislators and the Multi-State Tax Commission. This system would make it easy for sellers to identify the tax owed, and have the collections and payments to state and local government handled by a third party. The Zero Burden Tax Collection System is intended to be voluntary for businesses.   James Gilmore responds: The delivery of goods already is already heavily taxed through excise taxes on gasoline, tires and income taxes. I am very doubtful that states would ever impose specific "delivery taxes." In any event, the majority of consumer transactions on the Internet are in services and information. Increasingly, technology is enabling a variety of goods from software to music to books to be delivered electronically. We are talking about the ability of a consumer to dial up an Internet site on a wireless phone from a plane over the Pacific Ocean and make a virtually anonymous purchase of a digitally delivered product using electronic money. As technology continues to encompass product and delivery medium, taxing delivery becomes an unfeasible policy. Finally, there is little correlation between the value of the item shipped and its shipping costs, so there would be no rational basis for taxing each delivery at the same cost -- unless government wanted to open each citizen's packages -- and that would be completely intrusive and un-American.

The PBS NewsHour is Funded in part by: Additional Foundation and Corporate Sponsors
	Program Support From:
About Us Feedback Subscriptions/Feeds Privacy Copyright © 1996- MacNeil/Lehrer Productions. All Rights Reserved.
Support the kind of journalism done by the NewsHour...Become a member of your local PBS station.