SSTP Makes Progress In The US

by Mike Godfrey, Tax-News.com, New York

07 May 2002

After President Bush signed the 2-year extension of the e-commerce tax moratorium last fall, the battle between those who would and wouldn't tax e-commerce dropped out of the headlines, but work has been continuing on the Streamlined Sales Tax Project (SSTP), the effort to develop a standardised model for sales taxes which would allow legislation to apply over most or all of the US.

The SSTP is a two-part process. First, states must pass enabling legislation, which allows tax administrators of the different states to work together to craft a new set of model sales tax laws. Second, states must individually amend their sales tax laws to conform to the model legislation. As of April 1, 2002, 25 states and the District of Columbia have passed enabling legislation. The legislatures of eight other states have introduced the legislation. States that have passed enabling legislation are already working together to draft model sales tax laws.

The SSTP has also announced that, as part of its pilot testing of automated sales tax collection, electronic sales tax payments have been successfully processed and received by the state treasurers' offices in North Carolina, Michigan, and Kansas, through Taxware.

Meanwhile, retailers and states strapped for tax revenue continue to lobby lawmakers, saying that e-commerce is enjoying government protection and an unfair advantage. Even though online sales still account for only about 1% of all retail purchases in the United States, a recent University of Tennessee study argued that states lost US$13 billion in tax revenue to online sales in 2000.

GartnerG2 research director Mike McGuire told the E-Commerce Times that there is no longer any justification for protecting e-commerce while it finds its feet, saying that online consumers are not motivated by price as much as was once believed. In fact, he said, people often cite convenience and selection ahead of cost when listing their reasons for buying through the Web. McGuire said that 2004 or shortly thereafter is a likely time for passage of some form of online sales tax.

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