Streamlined Sales Tax

States across the country are moving forward with creating uniform standards for state sales taxes, but significant challenges remain according to a panel of experts at the National Conference of State Legislatures today.

At issue is whether sales taxes should be collected at the point of sale or at the delivery address.  Local governments are concerned about the loss of local sales tax revenue that results when people order things and have those items delivered.

One of the panelists, Middle Tennessee State University economist Bill Fox says that distinction is important as internet sales continue to increase.

“What happens today, by one estimate, online sales are 30-percent higher than they would be because of the tax advantages.  That’s not to discourage online sales.  They’re great, that ought to happen.  But what it really tells you also, is that people are buying a lot of things online that they’d really rather buy in a store on main street but they’ll buy it online to save the tax.”

Because there are five states with no sales tax, many worry that businesses doing a majority of their sales online could move to a no-sales-tax state and undercut local retailers.

Fox says the streamlined system won’t be implemented nationwide until the federal government steps in to allow states to require companies to charge and remit sales taxes.