TEXANS SPLIT ON INTERNET TAX
Last fall I asked Texans their opinion on whether sales made over the Internet should be taxed the same way goods are taxed in a retail establishment.
The question was: "Items sold over the Internet are not subject to sales tax. That gives the Internet an advantage over regular ‘brick-and-mortar' stores. Some think the playing field should be made more even because states depend on tax revenue from store-bought items. If the Internet takes business away from stores, it will shrink state tax revenue. That is a problem for states like Texas that have no state income tax.
"Others believe that subjecting Internet sales to a retail tax should not be allowed. What do you think should be done?"
When we tallied your responses, 56 percent of you were in favor of taxing sales over the Internet, while 43 percent said leave Internet sales untaxed. Here are some of your comments:
From Houston: "It is imperative to our state and local governments that they receive sales tax revenues from all sources of goods sold, including those purchased on the Internet. In fact, taxing all goods equally will keep our sales tax rate low and allow Texans to avoid a state income tax. Texas is in the best position to determine what exemptions should be awarded, and for what time period."
Amarillo: "The Internet and its supporting high technology industries should be allowed to grow unabated by the inhibiting restrictions of taxes, particularly a tax in Internet sales."
Lubbock: "Tax Internet sales, but start slowly and impose this tax incrementally."
Austin: "It is unfair to exempt Internet sales from the sales tax. I think this is a scam to avoid paying local taxes."
Temple: "The Internet industry is developing technology which has the potential to bring great benefits to our nation. A democratic, free-market society needs to be free from as many government restrictions as possible, otherwise we run the risk of suppressing the growth of many of our most vital businesses."
Abilene: "Not taxing Internet sales is unfair to the hundreds of thousands of retail operations that pay property taxes, employment taxes and yes, sales taxes. The e-commerce retailer immediately has a 6 percent to 9 percent (or more) advantage over the local retailer because of not having to pay sales tax. In the competitive retail world, that advantage can be the deciding factor for who makes the sale."
Georgetown: "This industry is growing internationally at such a rapid pace that restrictions such as taxes would severely handicap our country and allow other technologically advanced nations to surpass the United States in these highly competitive markets."
McKinney: "Internet commerce is going to play a significant role in the way business is conducted, but it doesn't need any special consideration such as freedom from taxes."
Amarillo: "If we don't need the funds provided by the sales tax, then why not do away with the sales tax entirely, regardless of where or how the sale is made?"
Midland: "Please vote against this. We have enough taxation already."
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Like many of our readers, I am concerned that a permanent tax moratorium on Internet purchases would have a negative impact on main street businesses and local governments.
This is particularly true in a state such as Texas, which has no income tax and relies on sales taxes to provide important public services such as law enforcement.
My preference is to not impose a permanent moratorium on taxing Internet transactions and to monitor Internet sales as compared to conventional retail sales. We will want to develop a system that treats all sales the same whether a purchase is made in a store or over the Internet. I am not comfortable with a public policy that favors one type of retailer over another.
Nor do I favor taxes on Internet service itself.
Electronic commerce is expected to play an ever greater part in the way the United States – and the world – conducts business. We must define a public policy that keeps e-commerce vibrant, while not handicapping more traditional retailers.
April 21, 2000