The Seattle Post-Intelligencer reports on an nineteen state effort to start imposing local sales taxes on internet purchases:
On Tuesday, Washington joins 18 other states that require some e-commerce businesses to collect sales tax. About 1,100 online retailers have volunteered to collect, and in return, Washington promises not to sue them for back taxes they might have owed. Three more states are on the way to adopting the law.
This isn’t an issue I’ve followed closely, but I’m generally in favor of tax-free sales as a useful form of competition that keeps local rates in check. (They’re not technically tax-free now, but the legal obligation to pay falls on consumers and is largely unenforceable.) Changing the point of taxation to the location of the buyer from the location of the seller also threatens to hit businesses with high compliance costs:
The law was poorly thought out, said Karen Evans, accounting manager at Aptech Systems Inc. in Black Diamond.
“I’ve been talking to our state representative, trying to figure out how in the world this legislation got passed,” she said. “I know there are reasons for it. Some of the bigger companies are pushing for it, but they’re doing it on the backs of all the small businesses around the state.”
The problems facing small businesses are two-fold. First, businesses must change their online software to recognize Washington’s 350 taxing districts.
“Ninety-nine percent of our sales goes out of state,” Evans said. “We’ve had to invest $1,000 so far for something that affects less than 1 percent of business.”
Second, if the law goes national, small businesses will have to decipher the thousands of tax codes in the U.S. and file tax returns up to several times per year for each of them.
And the end of this paragraph stands out:
The change does not affect deliveries to outside of the state, wholesale sales, services, sales of vehicles, aircraft, mobile homes or boats or towing companies. Florists also are exempt.
Why are books taxable and flowers not? No logical reason, florists just happen to have a well-connected lobby. That’s the kind of random exception that’s bound to creep into local tax laws, making life hell for retailers trying to keep track of them all.
It would seem that as gas prices rise that we would be able to tax as we are certainly paying at the pump we refuse to tax the people we Tow with little extras called sur-charges.
Comment by Jeff Brown — July 2, 2008 @ 11:31 am