American E-Commerce threatened by additional tax

American E-Commerce threatened by additional tax

Politicians around the globe are looking for new financial sources and they find them by inventing new taxes. In America lawmakers try to put a sales tax on e-commerce that was so far text-free, and this added to its attractiveness for both supplier and customer

U.S. Congress considers bills permitting the states to require all online merchants doing business in that particular state to collect sales tax. In 1992 the U.S. Supreme Court was ruling that only merchants with physical presence in a state are responsible for collecting sales tax. Of course it would be lucrative to charge e-business with a retail sales tax because it is estimated that would bring around USD 20 billion annually and this would delight cast-strapped states and municipalities but definitely not e-commerce customers!

The National Retail Federation is supporting such a bill, because online sales taxes would help to fight the growing problem of “showrooming”, meaning that customers go to a store, checking out the products and then buy them online to save money, including tax. The vice president of the Federation Rachelle Bernstein declares: “Tax laws must be applied equally, whether a customer goes to a store, shops on its computer or orders from a catalogue by phone. Otherwise the government is giving “a tax advantage” to one type of business over another and that she states is simply unfair.

On the other hand, the Direct Marketing Association, the American Catalogue Mailers Association, the Electronic Retailers Association and NetChoice formed the True Simplification Trust Coalition (TruST) to fight jointly what they call “unfair internet sales taxation”. The ultimate goal of the TruST Coalition is to simplify the state-by-state taxation process in case merchants should be obliged to charge state taxes and not being overwhelmed by logistics and potential legal repercussions of this added responsibility. And Hamilton Davison of the American Catalogue Mailers Association states: “We don’t dispute that the tax is due, but the issue is how it’s collected. It’s not easy to collect for 9600 different state and local tax jurisdictions”.

The TruST Coalition opts for an every state same sales tax rate for online purchases. If the rate changes from state to state, the coalition demand for online-merchants access to “subsidised and certified software” that automatically computes the sales tax to be charged for each transaction. Giant e-commerce Amazon has declared that tax collection could be in its own interest, because it would require everyone to follow the same rules.

It has to be added that five U.S. States don’t have added sales tax: Alaska, New Hampshire, Delaware, Montana and Oregon and they will not be obliged to introduce it and this leaves loopholes in the system, because retailers and online merchants are inventive and might just set up a business unit in one of those States to escape tax charging! The last word is not spoken yet in this new taxation question!


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