American Politicians may end tax-free e-commerce

E-Tailers may soon have a new obstacle to cross: taxing the Internet. Several United States senators and governors are teaming up on an initiative that would require online stores to charge sales tax on out-of-state purchases.

by Kristina Knight

Currently, companies based in one state are not required to tax purchases made from another state.

This is not a new debate. American Governors have been lobbying Congress to enact such a law for at least six years, saying that their states are losing out on revenue for education and law enforcement because of the out-of-state purchasing issue. Another factor that could push the initiative through this time is the 2002 Streamlined Sales Tax Agreement, which if approved would simplify some state tax laws. There is also the possibility that after the next election, Democrats will control Congress and a Democratic Congress is seen as more likely to enforce taxation initiatives.

"When you have a Democratic majority in Congress, that Congress will be more friendly to imposing new burdens on business if it means additional tax collection," said Steve DelBianco, executive director of the NetChoice coalition (via CNET). The coalition, with members like eBay, Yahoo and the Electronic Retailing Association is opposed to the sales tax plan.