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No Taxation Without Ambulation

Posted by on December 12, 2008

[This post was originally written for my employer’s blog, Show-Me Daily.]

Missouri’s budget crisis is certainly in the news, so some legislators are trying to innovate their way out. According to an article in the St. Louis Business Journal (snippet from the online version), a tax on Internet-based sales will be proposed in the Missouri General Assembly in January.

The bill is called the “Streamlined Sales and Use Tax Agreement Act,” and has already been pre-filed, so it can be found on Policy Pulse in a search with keywords from the bill’s title. Why can’t it be found by searching the keyword “Internet” or “e-commerce?” Well, this bill doesn’t only tax Internet sales. It is a complete overhaul of the Missouri sales tax system, in which tax becomes assessed at the point of delivery, rather than at the point of purchase. As pointed out in the Business Journal‘s article:

Missouri currently has a total of 2,173 local sales taxing jurisdictions. The only other state with a higher number of such bodies is Louisiana.

The article is not too friendly to the idea proposed in the bill, and points out the difficulties of administering such a tax system.

This proposed legislation is also an attempt to bring Missouri in line with a larger movement, the Streamlined Sales and Use Tax Agreement; here’s a list of current participating states. In the Business Journal, Sen. Joan Bray, the bill’s sponsor, said, “Kansas went through the process and Washington state is going through the process.” Here is a decent article that discusses Washington’s recent change, and the SSUTA. From the article:

In 1992, the U.S. Supreme Court ruled states could not force businesses to pay a sales tax unless the company has a physical presence in the state.

This federal ruling means that membership and participation in the SSUTA is voluntary, and 22 states have already joined in at least some capacity.

I am opposed to this proposal for Missouri not only because of the high cost of implementing and enforcing the measure, but also because of the limitation that this represents on the free choice provided by the Internet. It is currently possible to buy many things you need or want on the Internet at prices that are competitive with local stores, even after shipping costs are considered. This is a tremendous boon for people who don’t happen to live near a major metropolitan area, and a nice opportunity to comparison shop from far and wide. A tax on Internet sales is yet one more way that legislatures are attempting to restrict the wonderful boon that Internet commerce represents, for buyers and sellers alike.

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