Internet Taxes Could Be Coming Soon

Backers Hope the Taxes Could Begin This Fall

State and local governments have been lobbying Congress for the right to begin imposing sales taxes on Internet shopping, monthly taxes on Internet connections, and, possibly, taxes on e-mail. An article on CNET News says that states and cities are forbidden by federal law from collecting such taxes, but, with support from other political groups, are hoping they can change congressional minds. The result of new taxes could add up to billions of dollars, money that local and state governments say they need.

CNET quotes Senator Michael Enzi (R-Wyoming) as saying that if a new law is not passed, "Other taxes may zoom upward instead." He added, "I want to avoid that." He pointed to the loss of sales tax revenues because of the increasing use of the Internet for consumer purchases.

CNET noted that several proposals have surfaced in Congress that would permit the states to impose the Internet taxes: (1) Enzi has proposed mandatory sales tax collections for Internet purchases; (2) the U. S. House has considered allowing the ban on Internet access taxes to lapse when it expires on November 1; and (3) and another House member said that a final version of a pro-sales tax bill would come by July.

David Quam, of the National Governors Association, is quoted by CNET: "The independent and sovereign authority of states to develop their own revenue systems is a basic tenet of self government and our federal system."

Efforts to require the collection of Internet sales taxes have failed in the past, but now, with Democrats controlling Congress, advocates of Internet taxes feel that the climate is more favorable for the passage of such laws.

Opponents of Internet taxes point to the practical problem of working through a multitude of taxing agencies-more than 7500-each of which has its own rules. CNET notes, for example, that some legal definitions would tax Milky Way Midnight candy bars as candy and treat the original Milky Way bar as food. Pro-tax advocates are hoping that the so-called "Streamlined Sales Tax Agreement" will bring some order to the often contradictory provisions of current tax laws.