Wednesday, January 14, 2009

Internet Web Tax Police

I get my TV from Dish Network (no local channels), the only newspaper I read is Human events, and I listen to Sirus Satellite radio, so needless to say I don't get a lot of local news and for the most part, I'm fine with that as when I do read the local papers, I'm usually unimpressed. Yankee Philip recently told me about something he read in the News Leader paper about Internet tax for VA. He provided me the page with the story on it and yes folks there it was in black and white. The story states that all purchasers are required by law to pay tax on non-food purchases in VA and to report and pay at tax time for those purchases where tax was not collected at the time of the transaction which largely means Internet sales. Needless to say most people don't report these purchases to their accountants or report them on their annual tax returns.

If this is a new concept to you or you've wondered how this is determined, here it is in a nutshell. I'll use examples because I think it's easier to explain it that way. Ex. 1: you buy a cordless DeWalt drill at Home Depot one online and another via their web site, do you pay tax on these purchases? YES on both, because Home Depot has "brick & mortar" locations within VA. Ex 2: You purchase the same DeWalt drill from, do you pay taxes? Currently the answer is NO, (Amazon won't collect taxes, but technically your supposed to remit the sales tax on your state tax return) because does not have a "brick & mortar" location within VA (or any other state as far as I know excepting their corporate HQ). State Senator Emmett Hanger says he'll push in this years General Assembly session to level the playing field between online and traditional retail. This should come as no surprise to those of you who have followed Sen Hangers career and know that he is pro tax and has been for quite some time in fact it's the reason he had to fight for and nearly lost the Republican nomination for State Senate in his last race. Well Senator, here are a few questions that I would like answered on this issue:
1.) What part of the already bloated and over spent state infrastructure would be responsible for collecting this money? 2.) How would you force other states to handle this and get the money from them? 3.) What do you do about the 5 states that have no sales tax; Alaska, Delaware, Montana, New Hampshire, and Oregon, are you going to somehow force them to create a tax bureau to do VA's bidding? 4.) How do you handle a purchase made on an Internet capable smart phone where the service provider is based in the VA, the physical purchase is made by a VA resident while on vacation in California from a company based in Michigan, and shipped to an address in Florida?

This is just plain STUPID, once again were punishing the guy who built a better mouse trap and getting further and further away from capitalism and closer and closer to socialism. I don't see any effective way to bring this forward short of a brand new government bureaucracy or throwing money into and already failing one. The way I see it, either way this will cost Virginians more than it makes in the short term and probably the long as well since government will run it and there track record of running pretty much anything isn't real positive.