Thursday, February 3, 2011

Online Sales Tax?

The Morning Call ran a story today that discussed the efforts of some brick and mortar merchants to institute an online sales tax.  Christopher Rants, head of the Main Street Fairness Coalition, urged the House Appropriations Committee to enact such legislation, saying that the lack of a tax costs the state $706 million in revenue each year.

This isn't a new concept.  Sales taxes on internet sales are difficult to collect, particularly if the purchaser and seller are located in different states.  In order for tax to be collected, the states of the purchaser and seller must agree to do so - 24 states are currently in such a compact, but Pennsylvania is not one of them.

Rants and his supporters argue that by not collecting the tax, brick and mortar merchants (who are required by law to charge a sales tax) are placed at a competitive disadvantage.  This, in turn, hurts Pennsylvania merchants, and at a time when government officials are looking to collect any new form of revenue that they can, the idea is picking up some steam.

Opponents of such legislation argue that a new tax is the last thing that any type of business can afford, particularly given the difficult economic climate.  Online sellers also argue that they, too, are small businesses and are having enough difficulties in this economy.

What do you think?  Is this a matter of fairness, or should the internet still continue to operate as largely exempt from taxes?

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