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Privacy Concerns Over Leavitt Internet Sales Tax Plan

Tax-news.com

05 December 1999


A Washington-based consumer advocacy group has slammed Utah Governor Mike Leavitt's internet sales tax plan as being "Orwellian".

Under Governor Leavitt's "zero-burden" plan, local sales tax on e-commerce transactions would be collected by trusted third parties such as payment systems and banks. The National Governors' Association has put its support behind Leavitt's idea which critics have called a blueprint for a national sales tax system because one of its objectives is to "adopt a completely unified system" within eight years.

But the Orwellian aspect of Leavitt's plan lies in its implications for consumer privacy according to Consumer Alert policy analyst James Plummer. Under the Leavitt plan consumers would be required to provide a 'geocode' when purchasing online to determine what taxes apply. Plummer claims that this would "be a huge burden on consumers" because "they would be forced to reveal all sorts of information that they might otherwise not - who they are, where they are and so on".

Plummer also contends that the 'geocode' system could pave the way for the monitoring of tax on telephone and traditional face-to-face purchases. The National Governors' Association is not shy about this ambition, claiming on its website that "this system could eventually be extended to all merchants and all types of transaction, regardless of whether they occur in a store, through a catalog, or via the Internet."

Privacy advocates are horrified at such a suggestion. Taken to its logical extreme, the Governors' position would result in consumers being forced to identify themselves via their 'geocode' even for face-to-face cash transactions.

Although the governors claim their plan absolutely prohibits the commercial use of such data, the reality is that once such a database exists it will become a target for unscrupulous operators and law enforcement agencies, whom most would agree already know too much about individuals' lives.

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