Front End
New Architect
March
2003
Read Our Lips
If you buy a CD for $13.99 at a New Jersey record store, the clerk will charge
you, with state sales tax, $14.83. If you buy the same compact disc through
CDNow, the bill will arrive at exactly $13.99 (plus shipping).
The absence of any sales tax has always been a great advantage to buying products
online—and a competitive advantage that helped sustain the e-commerce industry
throughout the ’90s. But in tough post-boom times when states are mired
in debt, many policymakers are again proposing Internet sales taxes to boost
revenue. And this time they’re more serious than ever.
If the Streamlined Sales Tax Project—a thirty-two-state committee organized
by the National Governors Association—has its way, all cities and localities
in any given state will levy the same tax rate. R. Bruce Johnson, a Utah tax
commissioner and co-chair of the project’s implementing states group, predicts
that this phase will pass by late 2003. Then comes the hard part: asking Congress
to implement the online sales tax.
The proposal gives politicians and e-tailers something to fight about in an
election year. In Colorado, the tax became a fiercely debated political issue before the last election, with Republican
Governor Bill Owens in opposition and Democratic challenger Rollie Heath pledging
support. Meanwhile, Wal-Mart, never highly regarded as an online presence, favors
the project’s efforts and “a level playing field for all retailers,
regardless of the form of distribution,” says spokesperson Cynthia Lin.
