Different Year, Same Net Tax Debate

As America prepares once again to celebrate a new year, all the usual national rituals are getting ready to make the rounds. Those with ever-expanding waistlines will go on diets, sinners will make resolutions to behave, and oh yes… e-commerce stalwarts of all ideologies will renew the fight on whether online sales should be taxed.

The Internet Tax Freedom Act, enacted by Congress in 1998 but set to expire in 2001, neither prevented nor compelled the collection of online sales taxes, instead leaving the matter up to individual states and businesses. To date, the issue remains unresolved.

Come 2001, state governments will once again say that a moratorium on Internet taxation is destined to deplete their coffers and compromise civic services. E-visionaries will espouse the bigger picture, beseeching all concerned to recognize the necessity of allowing e-commerce to evolve unfettered. And legislators will line up neatly on one side of the aisle or the other, resolute in their convictions about tax or no tax.

It has become an annual ritual, to re-introduce the issue of online taxation and battle it out until each side retreats from sheer exhaustion and frustration. No solutions, no new propositions and little progress are the most predictable outcomes in the annual fray.

But how many more years can this debate really go on? Is it finally time to force some form of tax on online purchases? The answer, of course, depends on who is being asked.

Retailers Tax Quietly

As the conflict continues, some online merchants have already made their statement, albeit quietly and not in a flashy press release. It seems that a considerable percentage of retailers that also play in the online arena are routinely charging tax on online purchases.

Last week, when Forrester Research released its encouraging e-fulfillment study for the year 2000, nestled amid all the good news about delivery was a more minor mention that 40 percent of online merchants studied charge sales tax on purchases.

For my part, this bit of news significantly alters my personal shopping choices. I’m going with the no-tax sites.

Silencing the Naysayers

For those communities that continue to cry poor and threaten cancellation of every essential city service from law enforcement to trash pickup if e-commerce isn’t taxed, I have to say the argument is getting old.

Did someone forget to send them the memo? We’re in a new economy now. It’s about self-sufficiency, and those communities that have spent the last several decades relying on local sales taxes to pay for street sweepers, snow blowers and tree-trimmers may need to get creative and find new revenue sources.

Whether that involves privatization of city services or new bond issues, we’re not going to quash the growth of online commerce so that cities can rest comfortably on their cushion of sales taxes.

Lift Every Voice

The good news for the anti-tax camp is that now, “W” stands for more than Washington, D.C. That “W,” as in George W. Bush, stands for an incoming leader of the free world, who tends to be somewhat unsympathetic to the plight of dot-coms.

“W” stands for the captain of the team that is suddenly speaking up about the need to tax what Forrester Research estimates is US$488.7 billion in Internet sales this year.

However, “W” also stands for, “Write your legislators now and make your voice heard.”Why now? Because right now opponents to a tax-free Internet are circling their wagons in advance of the October expiration of the Internet Tax Freedom Act.

Forces Mobilizing

And if you haven’t heard the name Rauschenberger, stay tuned. Illinois Republican State Senator Steve Rauschenberger has October 1st marked neatly on his calendar.

In preparation, he has formed a task force to draft legislation to seamlessly allow states to begin collecting taxes on all Internet purchases. Prior to the expiration of the Internet Tax Freedom Act, Rauschenberger intends to introduce the bill in 30 state legislatures.

As for my new year? I can’t promise to drop those 10 pounds, and as for my sins, well, let’s not go there. But I am prepared to speak up and fight the good fight to extend and expand the moratorium on e-taxes.

What do you think? Let’s talk about it.