Local leaders discuss implications of charging sales tax online at BYU-sponsored symposium



    The debate still rages on as to whether Internet sales should be taxed, almost two years after the House of Representatives imposed a three-year block on any new Internet taxation.

    The J. Reuben Clark Law School hosted the Electronic Commerce Taxation Symposium in the Wilkinson Student Center on Friday. Representatives from the educational, state government and business sectors spoke.

    Richard B. McKeown, chief of staff to Utah Gov. Mike Leavitt, said that if the current sales tax cannot be repaired then it should be eliminated.

    “The Internet has now amplified all of the concerns that we’ve had about the sales tax anyway,” he said.

    Sales tax on Internet transactions is not the only issue because Utah also employs a use tax, McKeown said.

    If a Utah resident purchases goods over the Internet for consumption in the state, she is supposed to report the use tax and pay for it at tax time, he said.

    However, less than 1,300 residents reported use tax last year, which is money the state should have received, McKeowan said.

    Walter Hellerstein, law professor at the University of Georgia, said states view the Internet as a black hole of lost revenue.

    The three-year moratorium on Internet taxation was the first legislative act by the government, imposed by the Commerce Committee of the House of Representatives in 1998, Hellerstein said.

    At that time, Congress also established the Advisory Commission on Electronic Commerce to study issues related to taxes on the Net.

    However, Hellerstein said that it is unlikely the Commission will have a solution when it concludes in April.

    The solution to Internet taxation is to create a level playing field, where everyone who is selling the same product collects the same tax, he said.

    Rachel Anderson, 19, a freshman from Orem, with an open major, said she doesn’t mind being charged sales tax for online purchases.

    “I figure I’d be taxed anywhere else,” she said.

    However, Andrea Hrncirik, 20, a junior from Visalia, Calif., majoring in early childhood education and Spanish, is opposed to an online sales tax.

    “I think that it takes away the incentive of buying over the Internet,” she said.

    To solve how taxes should be collect online, Gov. Leavitt advocated technological solutions that includes software intervention, McKeown said.

    A third party would extract the correct sales tax from any electronic purchase in the state. It would then send the credit card company and the seller their portions of the transaction.

    Hellerstein’s theory keeps the responsibility of tax collection in the hands of retailers.

    However, Hellerstein said he didn’t know how it would apply to international sales.

    If the Internet remains tax free, states may have to seek alternative sources for funding.

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