NCPA - National Center for Policy Analysis


July 2, 2007

A new voluntary tax agreement -- the Streamlined Sales and Use Tax Agreement -- between 22 states means residents could now be charged a sales tax they're unaccustomed to paying on certain Internet and catalog purchases from businesses in other states, say the Fort Worth Star-Telegram and Seattle Times. 

Meanwhile, Congress is considering a similar plan to dip into Americans' wallets:

  • Some lawmakers want to develop a new tax system intended to create a "level playing field" for shoppers, businesses and governments, and help all states collect sales taxes not being charged on many Internet purchases.
  • A separate measure calls for lawmakers to decide whether to let a temporary ban on Internet-access taxes continue when it expires Nov. 1.
  • If the ban doesn't continue, it could lead to taxes and fees on broadband and dial-up connections and e-mail accounts.

Supporters, including Jewelers of America and the E-Fairness Coalition, say traditional retailers and local governments and states are losing out on big bucks as Internet sales soar. 

But others, including the National Taxpayers Union and the Direct Marketing Association, say new taxes aren't needed because online consumers already pay an assortment of fees.  For instance:

  • Consumers who shop through the Internet already pay fees and other charges for Web service.
  • Internet shoppers must also pay shipping fees, which vary widely due to factors such as weight of the item and the speed of delivery.

"Given the potentially destructive impact that expanding or raising Internet and telecommunication taxes could have on this important economic sector, the remedy could not be clearer," said Jeff Dircksen, director of congressional analysis for the National Taxpayers Union.  "Congress and the states should declare this tax territory permanently off-limits."

Source: "Your next online purchase may include a surprise: tax," Fort Worth Star-Telegram and Seattle Times, July 1, 2007.

For text:


Browse more articles on Tax and Spending Issues