Tax season is upon us. Cue groans and eye-rolling.

        This year's outrage is the “use tax,” which appears on Ohio income-tax returns for the first time. Kentucky has included the charge since 1990.

        Here's how it works: You shop online or buy from a catalog, and your state government whines about lost revenue.

        Most catalogs and Internet companies don't collect sales taxes for the states, and the U.S. Supreme Court says many don't have to.

        To compensate, our states insist we pay at the end of the year. Otherwise, the theory goes, traditional retailers will lose too much business to the new guys and tax revenue will decline, hurting public services.

        So we're supposed to keep track of our untaxed purchases, determine the sales tax in our states and counties, and pay what we owe in April.

        Yeah, sure. We'll get right on that.
       

Ky. results paltry
        Ohio's use tax has been around since 1936 and Kentucky's since 1960. But for decades, the issue was so unimportant taxpayers had to work hard just to order the right form, much less remember anything about their obligation to pay.

        Then came online shopping and its companion, dire warnings about the effects of online shopping.

        For the last 10 years, Kentucky returns have reminded people to pay their use taxes. Let's take a look at the results.

        Out of 1.3 million tax returns each year, here's how many have reported use taxes, along with the revenue received:

        • 1996: 21,246 and $741,591.

        • 1997: 19,110 and $711,653.

        • 1998: 16,952 and $651,862.

        • 1999: 16,606 and $711,131.

        Gee — the numbers are declining. Either catalogs and e-tailers are losing business, or people are losing patience for a tax that makes no sense.

        My money is on the latter.
       

No hoodwinking, please
        Governments, if they must collect taxes, ought to at least have a good excuse.

        Ohio's goes like this: untaxed transactions will cost the state and its counties about $211 million in lost revenue through June 2002. That's only about 3 percent of the sales taxes collected each year, but the amount is bound to increase, politicians say. And as traditional retailers lose customers to companies not burdened with sales taxes, they may start cutting jobs.

        To which I say: Don't try to hoodwink us with hand-wringing about the New Economy. At the moment, it's looking pretty old and broke.

        Furthermore, local governments shouldn't be using taxes to help certain businesses compete. They should collect them to pay for services like fire and police protection.

        What service is Kentucky or Ohio providing to, for example, the Lands' End catalog company? None. That's why the U.S. Supreme Court says such companies can't be forced to collect sales taxes for states in which they have no physical presence.

        Instead, Joe Customer is expected to pay those taxes on his own. In case we forget, Ohio has asked some e-tailers and catalog companies to voluntarily collect the taxes “as a convenience to customers.”

        Yeah, right.

        Cue laughter.
       
       Karen Samples is Kentucky columnist for the Enquirer. She can be reached at (859) 578-5584 or ksamples@ enquirer.com.

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