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US Retail Group Pushes for Internet Taxes

12 December 1999

A coalition of bricks and mortar retailers has been formed to push the case in favour of taxation of e-commerce transactions on the basis that tax-free e-commerce will create unfair competition between electronic and traditional merchants.

The E-Fairness Coalition includes a number of high profile retail peak bodies including the International Council of Shopping Centers, the American Booksellers Association and the National Association of Real Estate Investment Trusts. The Coalition also has the support of many state and local government agencies who are fearful that they will lose billions in sales tax revenue if swift action is not taken to regulate e-commerce. Some local government officials have even gone so far as to claim that the e-commerce tax drain could seriously impact funding for schools and other local government services.

The formation of the E-Fairness Coalition follows the implementation by the State of Michigan of a 'remote sales tax' to address such concerns. The Michigan Retailers Association has already voiced its support for the remote sales tax. Michigan was able to bypass the current US moratorium on new internet taxes because its laws already allowed for sales tax on out of state transactions - only the enforcement mechanisms were missing.

With the traditional retailers mustering their forces through groups such as the E-Fairness Coalition, other US states which already have laws requiring sales taxes on out of state transactions are likely to come under increasing pressure to follow Michigan's lead and devise measures to enforce sales tax on internet transactions.

Opponents of internet taxation have been quick to point out that despite the existence of such laws, less than one percent of consumers currently report and pay sales tax on other remote purchases such as mail order.



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