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September 2, 2004
An Internet Sales Tax: A Serious Blow To E-Commerce
Is an internet sales tax about to become reality? Brick and mortar merchants across the US complain that the lack of such a tax gives net marketers a serious advantage and they strongly support such a tax.
If you're reading this, you're either a net marketer, like I am, or you're a net buyer, like I am. Either way, it will cost us more money, and make selling much, much more difficult. Yes, the lack of an internet sales tax does provide an advantage over a physical store, but the retail merchant has big advantages that we don't have.
For instance, it's much easier to sell a product that can be touched and seen. Imagine selling a sweater online, for example. A buyer who can run her hands over it and feel the texture, hold it up in front of a mirror, try it on for size, is much more likely to buy than with a three inch picture on a monitor screen. Personally, I rarely buy clothes online because the colors in real life usually are different from they way they appear online.
Another huge advantage for the store owner is that issue of trust. Everyone knows about online fraud and the possibility of getting stuck with poor merchandise (or none at all) and not getting your money back. If I buy something from WalMart or Home Depot, I know they will be there tomorrow and I can go talk with a human being, if necessary.
The burden of sales taxes on a small seller might be so overwhelming that it would drive large numbers of folks right off the Internet. eBay claims that 400,000 people make a full time living on its site, which doesn't include the millions who earn smaller amounts of money. The sales tax law currently under consideration allows for different tax rates in each of the 49,000 Zip Codes in the US. That is mind boggling and the paperwork could eat up humongous numbers of hours.
The best article I have read on this subject recently is here:
http://www.auction-sellers-resource.com/newsletters/aug/3.shtml
Our economy has been less than robust in the past few years, and Internet sales have been a shining exception to many dismal areas. Why anyone with sense would tamper with this is a total mystery, except that it is yet another example of short term expedience without considering the long term consequences. And there are so many examples of this:
* In the city of Atlanta, governmental corruption and tunnel vision has allowed the city water system to degenerate to a dangerous level. The governmental solution: to sharply increase business taxes. The reaction of business: move out of the city limits of Atlanta, thereby further decreasing the tax base and lowering revenue, rather than increasing it.
* The legislature of Georgia enacted severe restrictions on the mortgage industry, effectively reducing the amount of money it could make. The response of the mortgage industry? Refusal to do business in GA. The result: the real estate industry crashed to its knees and home owners couldn't obtain mortgage money. The legislature was forced to repeal their law.
George Bush has spoken against a net sales tax, while John Kerry favors it. Regardless, it's important to let our representatives know how we feel about the issue. Personally, I'm agin' it (that's “southernese” for NOT!!!)
Posted by SydneyJohnston at September 2, 2004 10:34 AM
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