Don’t look now but tax-crazy America could be taxing the Internet and your computer as early as this fall. That would mean taxes on e-mail, taxes on Internet shopping, and taxes on broadband connections.
State and local governments are pushing Congress for two dramatic changes: the power to charge sales taxes on Internet shopping, and the ability to impose new monthly taxes on DSL and other Net connections. The result could be an increase in tax collections in the billions of dollars.
One Republican advocating this new barrage of taxes, U.S. Senator Michael Enzi of Wyoming, has authored a bill to mandate sales tax collection on Internet purchases, one of the two areas targeted for higher taxes. Enzi threatens that without the mandate, other taxes like income or property taxes will shoot up to compensate for a loss of sales tax revenue.
Imposing sales taxes on Internet purchases would be difficult, given there are more than 7,500 tax agencies, each with different rules. Some rules consider Peanut butter Girl Scout cookies as candy but Thin Mints or Caramel deLites are classified as food.
Enzi and his pro-tax supporters say enacting the Streamlined Sales Tax Agreement would simplify state sales tax laws. The concept is one that I oppose and recently blogged about.
Thankfully, there is opposition. U.S. Senator Ted Stevens, an Alaska Republican, says he wants “an impregnable ban on taxes on the Internet." Jeff Dircksen, the director of congressional analysis at the National Taxpayers Union in Alexandria, Virginia said in testimony before a Congressional committee, "If such a system of extraterritorial collection is allowed, Congress will have opened the door to any number of potential tax cartels that will eventually harm rather than help taxpayers."
Another proposal in the House would allow a temporary ban on Internet access taxes to come to an end when the ban expires November 1, 2007. Access taxes are taxes that local and state governments charge to single out broadband or dial-up connections.
Suppose the temporary ban on access taxes goes away in November. That would literally open up a Pandora’s Box of taxes on consumers.
States and local units of government all across the country could then impose a battery of Internet access taxes. Consumers would receive a monthly Internet connection bill that would look very much like their telephone bill, containing line after line of confusing fees added on at the end. Those surcharges that are tacked on can make up as much as 20 percent, or one-fifth of the phone bill.
The Heartland Institute reports that the fees states impose on mobile phones, cable TV and landlines run far higher than state sales taxes at an average of 13.3 percent, cost the average household $264 a year, and total $41 billion annually.
That’s not all. U.S. Senator John Sununu, Republican of New Hampshire says if the ban on Internet access taxes is allowed to expire, you can expect taxes on e-mails.
It is interesting to note who is lobbying Congress hard to implement these vast changes: The National Governor’s Association (NGA). Governor Doyle is a member of the NGA Executive Committee and the NGA Economic Development and Commerce Committee.
If you oppose plans to tax the Internet, you should contact your Congressman and Senators Kohl and Feingold.
At the state level, the Milwaukee Journal/Sentinel is reporting Revenue Secretary Roger Ervin has stated Wisconsin will join a
multi-state campaign to make it easier to collect sales taxes on Internet purchases, the Streamlined Sales Tax.
I oppose the Streamlined Sales Tax because it is simply a tax increase on business and commerce that will cost the state millions of dollars. Read a
column I wrote on the Streamlined Sales Tax last month.
