California considers enforcing sales tax on Web
- By Meghan Holohan
- Sep 01, 2000
The California state Senate Wednesday passed a bill that, if approved by
the state Assembly and signed by the governor, will require all California-based
companies to add sales tax to online purchases.
The bill is aimed at the ambiguous area of taxation on the Internet
and targets companies that are based in California and have an online presence
but don't charge taxes on purchases. While there has been widespread debate
about how to apply sales taxes to online purchases, no other state has passed
"This bill would clarify that the processing of orders electronically,
by fax, telephone, the Internet or other electronic-ordering process does
not relieve a retailer of responsibility for the collection of the tax from
the purchaser if the retailer is engaged in business in this state," the
"I think it's a good idea," said Andrew Bartels, vice president and
research leader at Cambridge Mass.-based Giga Information Group Inc. "There's
no inherent reason why Internet retailers should be treated any differently
than brick-and-mortar companies."
But he noted that there could be a problem in trying to implement sales
taxes in a nationwide effort because state sales taxes differ so greatly.
"There are literally thousands of different sales tax regimes that vary
by state, by county, by product. It's very complex. It would require a complex
software program to figure out all the different taxes," he said.
Bartels added that smaller companies may not have the resources to implement
such a plan. He added that by leading this trend, California might encourage
other states to enforce sales taxes on Internet purchases. The bill still
must be signed by Gov. Gray Davis.
While a majority of U.S. governors advocate some form of Internet sales
tax, Davis is the exception and has said in the past that the Internet is
creating wealth for his state without the imposition of an Internet tax.
Patrice Sellick, manager of media relations at the International Council
of Shopping Centers, which is a member of the Washington, D.C.-based e-Fairness
Coalition, said the coalition supports a measure that would require an Internet
sales tax because it would even the playing field for all consumers and
"Wherever a shopper chooses to make a purchase, we would like to see
people taxed fairly," she said.