Monday, December 8, 2003

Counties seek money on Web

Want law requiring sellers to collect sales tax

By Leo Shane III
Gannett Columbus Bureau

COLUMBUS - As online shopping continues to grow in popularity, county officials throughout Ohio are looking for their cut.

The County Commissioners Association of Ohio is asking state and federal lawmakers to back a federal proposal that would enforce collection of sales taxes on Internet retail purchases.

Larry Long, president of the group, said taxes on online shopping could total nearly $500 million for the state and another $80 to $100 million for county governments.

"The sales tax is the first or single biggest source of revenue for most of our counties," he said. "And we could be looking at an increase of 7 to 9 percent of what we now receive."

Last month the U.S. Department of Commerce announced that retail online sales totaled $13.3 billion for third quarter 2003, an increase of more than 27 percent from the same time last year.

But sales taxes on many of those purchases are not collected. The federal proposal would add teeth to an existing interstate tax agreement - already approved by 34 states, including Ohio - to ensure collection and return on state and local sales taxes.

The bill is under consideration in the U.S. House and Senate. Gov. Bob Taft has endorsed the proposal.

"That's money the states are currently losing because of the popularity of online shopping," said Orest Holubec, spokesman for the governor.

Long said the online tax is not a new fee. Rather, under current law, it should be paid by consumers to the appropriate government entity.

But that rarely happens, he acknowledges. And critics say regardless of the legal definitions involved, the proposal amounts to a new tax.

"Maybe technically it's not a new tax," said Robert Lawson, senior fellow with the Buckeye Institute, a conservative Ohio think tank. "But if it looks like a new tax, it is a new tax from the standpoint of consumers."

Lawson said the proposal simply amounts to state and local governments wanting to collect more money, and traditional brick-and-mortar retailers looking for excuses for slumping sales.

He said the federal government should stay out of the issue, arguing that sales tax collections are a state matter.

But Long said allowing online businesses to shirk tax collections gives them an unfair advantage over traditional retailers.

Not only would counties' sales tax collections increase, but the state's local government funds, which are calculated based on a percentage of Ohio sales tax collections, could see a boost as well.

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