Push/Pull on Internet-related Taxes
The Internet is new enough—hard to believe, isn’t it—that it’s still treated as a special case in terms of commerce. Case in point: State governments are currently prohibited from taxing Internet access, but that ban is set to expire Nov. 1 this year. Politicians and lobbyists are now debating whether to extend the current moratorium, make it permanent, or lift it. At the moment, DSL, cable modem, and wireless transmission services are exempt from taxation by state and local governments.
Predictably, Internet-related business interests support continuation of the ban or even making it permanent, while state and local governments argue that protecting those businesses indefinitely from being taxed would remove an important revenue source. Another argument from the state and local government standpoint is that the ban, originally imposed when the Internet was “new” to help it grow commercially, is no longer necessary.
Both houses of Congress have scheduled hearings on this issue, and you can expect more public discussion as the Nov. 1 deadline approaches.
What’s your take on the subject? Would local taxes be enough to discourage investment and slow the growth of the Internet as a commercial vehicle? Or would they have little effect?
Another online tax issue is also heating up: online merchants imposing out-of-state sales taxes? At the moment, state tax laws constitute such a maze that online merchants have been generally absolved from collect out-of-state sales taxes. That may be changing, with the Streamline Sales and Use Tax Agreement coming into play.
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F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm for catalog, e-commerce, and retail businesses. Offers expertise in business process and order management systems, inventory management systems, warehouse management systems.