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The specter of an online sales tax doesn’t seem to be willing to go away. One of the advantages of Internet shopping is the absence of any sales tax which can amount to a decent cost saving on the average purchase, but this bargain for consumers represents lost income for States across the US that are battling to close the gap on ever-increasing budget deficits.
It is not surprising then that Democratic Congressman Bill Delahunt of Massachusetts once again raised the online sales tax bogey. He first brought the bill for consideration in 2007, but now many in Washington think that he may have better luck getting it passed in 2010. For shoppers that have gotten used to saving 5 to 10 percent by shopping at websites like Amazon, they might be getting a rude awakening.
The bill is called the Main Street Fairness Act, which its loudest opponents argue that the name is deceptive. Delahunt says that tax increases are never pleasant, but sometimes they are just plain necessary. The revenue that the states have foregone because of not taxing online sales is approximately $52 to $56 billion over a six year period ending in 2012.
The congressman argues that imposing tax can help States across the country to make up for their budget shortfalls and the revenue that is collected will be put to work for the citizens of the State through local government initiatives. Every state needs funding to make sure its roads are maintained, water is treated and the supply guaranteed, and services like the police and fire departments are properly funded. These basic necessities are put at risk when the money in the coffers runs dry and the Internet sales tax offers a legitimate and reasonable way to inject some much needed cash into the system.
Those opposed to the bill are adamant that taxing online sales will only serve to worsen an already bad situation. Republican congressmen have put forth the argument that increasing the cost of goods and services online can put smaller online businesses at risk of closure because it essentially forces them to increase their price, possibly making them uncompetitive. They also say that making American citizens pay more at a time when personal budgets across the country have contracted is tantamount to taking punitive measures.
Ebay has put out a public statement opposing the law on the grounds it will hurt its hundreds of thousands of small businesses. "Year after year supporters of increased Internet sales taxes recommend legislation that would impose significant new costs on hundreds of thousands of online small businesses and ecommerce entrepreneurs, which is sure to harm the economy and kill small business jobs," a statement from the online auction company said today. "At a time when unemployment rates are high and small businesses across the country are closing shop, we are confident that Congress will protect small internet retailers and the consumers they serve from another Internet tax scheme."
On the flip side, the Democrats say that the online businesses have enjoyed an unfair advantage over brick and mortar businesses that have imposed the sales tax for far too long. They maintain that the Internet is no longer in its infancy and therefore should not be mollycoddled or given special treatment. In addition to this, they say that those who shop online tend to be the more savvy customers who make more money than those who still go to the brick and mortar stores- so in effect the tax would target a sector of the population that is more able to pay.
Amazon.com and Ebay.com are two of the Internet retail giants that would be impacted if the bill does in fact come into law, so customers are looking on anxiously to see what the future of Internet shopping is likely to be.
This guest post was provided by BackTaxesHelp.com, a website that offers self-help tax resolution guidance and services to taxpayers to aid in resolving tax problems. Visit their website to find information on resolving tax issues, IRS Installment Agreements, IRS settlements, and more. Like this article? Share it on Facebook or more!
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