05 May 2012
It seems the issue of Internet Sales Tax is hitting high/low points of late.
Reporters/bloggers work hard to express views to support their side. Few hit the mark.
An example is an article written on the Columbia Daily Tribune I respectively disagree with many of the ‘facts’ written in the article.
The author claims a new study shows that the State currently missing out on $468M in sales tax revenue, over double what a University of TN study made on 2009 which claimed a $200M est. tax revenue. Everyone loves to inflate numbers, and who knows, the numbers they use may very well prove the point they are looking for. Data I have comes from the Commerce Dept. In 2009, Gross online sales across the US was $145B. I made up a spreadsheet based on those numbers that can be viewed here. Based on those numbers Missouri claims $2.8B gross sales and $119M Use Tax revenues. Based on MO base tax rate, the University of Missouri Truman School of Public Affairs’ Institute of Public Policy claim of $468M tax would represent over $11B in online sales for Missouri in 2011. A number that I question. Missouri has a population of less than 6 million residents. Do the math. The study shows that every man, woman and child spent $1800 online in 2011.
Next the author makes this outrageous claim:
“If Congress passes legislation requiring companies to collect sales taxes on e-commerce and remit them to the states, local governments would have to pass a local use tax to collect their share. Boone County and Columbia do not have a local use tax, and voters shot down attempts to pass one in the ’90s.”
Granted, I do not know Missouri State Law, but in most States, Sales tax is divided or shared as income for county/city revenue needs. The claim that local governments are missing out on a piece of the tax pie is folly at best. Again, do the math. Assume that a local community has a voter approved tax increase to build a firehouse, community center, or even one to build a statue in town square to celebrate Earth Day. Just how much online tax revenue is the city losing out on online sales? Most county/city added sales tax is just 1%. Take a city size of 100,000. If every man, woman, and child each bought $50 of online items each year, that represents only $50K in tax revenue would be realized. Why a citizen tax revolt (citizens voted down earlier proposals)? Simple. All non-online sales would be taxed at the additional rate.
As an online retailer, I oppose forcing out-of-state sellers from collecting Missouri Sales Tax. A quote from this article tells a lot:
Columbia City Manager Mike Matthes said he hopes to gather officials from the city and county this summer to discuss how to approach a use tax. Tax systems have not kept pace with technology, he said. “Our systems need to accommodate the Internet.” His system and MO DOR do nothing to satisfy requirements of Quill v ND. States have done nothing to help online with software. To date there are over 11000 tax districts, and none are defined by zip code. Worse are compliance costs. For online to collect/remit Sales tax, estimates range for 5% to 17% for every tax dollar collected and States are unwilling to reimburse those tax collectors (online retail) for the paperwork and fees involved.
I could care less, nor why should I care, that a local community has a voter approved tax. The same could be said for an online Missouri seller that needs to know the ‘weird’ laws we have in South Carolina. This is one of the problems of Internet Sales Tax. No one is willing to walk a mile on the other guys feet. Sales Tax works great for one store, one location, and one tax rate; it was never designed for mail order, or today, the internet.