Internet Sales Tax

I received a phone call last week from "Americans for Prosperity." Perhaps you did too. The caller asked if I was aware that the Utah Legislature was considering collecting sales tax on Internet purchases. I indicated that I was. She asked if I supported this effort. I indicated that I did. And then she was no longer interested in talking with me. I can only guess at what she would have told me if my responses were different. I do know what I wanted to talk to her about. I wanted to talk about the email that her group sent me a couple weeks ago. Perhaps you received one too.

Since she wasn't interested in continuing our conversation, I guess I'll have to post my thoughts here. But before I address the email, I should establish some context.

I don't particularly enjoy being taxed. I don't like paying my cell phone bill. I often complain about the doctor's bill. But I'm glad that I have access to high quality medical care, I choose to pay for cell phone service, and I use the services provided by my city, county, state, and country. When I stop and think about it, I'm grateful for the opportunity to pay these things and for the benefits I get in return.

Two more things touching taxes. Just because I don't oppose the principle of taxes, doesn't mean I blindly support any tax. Which services should offered by the government and at what level of service are very sensitive questions and the answers may be different in different communities. An important part of our self-government is choosing, through our representatives, which services we want to receive (and pay for). Much of my time on the Council revolves around trying to provide the best value to Provo residents for their tax dollars. The City as a whole is very conscious of this balance.

Apart from the use of taxes, is the system for levying and collecting taxes. Volumes can be written on this subject, but let me just say that generally we (the people) agree that everyone should pay their fair share (and that there are many different ideas of what people's fair-share looks like).

So with that, let's jump into the email:

David,

If you're anything like me, you buy a lot online. It's the way of the future and so much more convenient than going to the store.I could quibble here about what the future might look like or the convenience and amazing customer service I find in visiting my local stores, but that's not my main point.
And for years, when you bought something online, they  didn't collect the sales tax. But now? Does the nebulous "they" refer to the State or online retailers? This matters because the "truthiness" of this assertion depends on who "they" refers to. The state requires all residents to pay a sales tax on everything they buy and attempts to collect all of it. If sales tax wasn't collected and remitted for us conveniently at the time of transaction (like brick-and-mortar stores and online retailers with a "presence" in the State) then we are required by the State to remit this sales tax when we file our state tax return. I know from experience that trying to calculate the amount of sales tax owed on Internet transactions, where sales tax wasn't collected, is very onerous. Anyway, this paragraph is misleading, and is only true of online retailers without a presence in Utah.
Lawmakers are looking to do away with that tax break by forcing retailers to collect the sales tax on internet sales.Calling this a tax break ignores the fact we are already required to pay it. It's only a tax break in the spirit of the "five-finger discount" (which isn't really a discount).
Which means all of your online shopping is about to get 4.7% more expensive. Not to mention, its going to create an uneven playing field between megacorporations with the resources to comply with the tax code in any number of different jurisdictions and small businesses who don't have the same kinds of luxury. Not all, I'm sure any avid online shopper has noticed that some sites collect sales tax. And shopping on sites that don't, only gets more expensive if you (knowingly or unknowingly) weren't paying the required sales tax at the time of your tax return filing. The "uneven playing field" argument is ironic and laughable. Laughable, because the thought that it would be hard, or expensive, for anyone, including small businesses, to access the sales tax rate for any US address, is silly in the information age. Ironic, because any brick-and-mortar store owner would love to tell you about the "uneven playing field" that exists because not all online retailers are required to collect sales tax.
Which brings me to my next point: we need to stop this bill from moving forward. Would you mind signing our letter to lawmakers today? Tell your legislator: don't tax the net! Purchases on the Internet are already taxed. Requiring online retailers to collect sales tax only makes it easier for people who believe in the rule of law to honor, sustain, and obey it.
Your wallet will thank you later.

For freedom,
Evelyn Everton
State Director
Americans for Prosperity Utah 

Two bills are before the State Legislature which address this issue and are now being actively debated. Part of these bills is a provision that it will be revenue-neutral to the State, meaning that the Legislature will reduce the overall sales tax rate so that the overall State sales taxes generated will remain the same.

So why should I weigh in on a city-focused blog? Sales tax is the largest source of funding for City services. As more purchases move online, less sales taxes will be generated and the City will have to raise taxes elsewhere to fund the same services. Also, our physical retailers play an important role in our community in many ways, including providing jobs and convenient and timely access to goods.

I encourage everyone to get informed on this issue before contacting your Legislators or signing any petition.