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Op-ed: The state has enough tax money already without Internet sales tax

First Published      Last Updated Feb 17 2017 04:46 pm

Are you ready for a tax on the Internet? Some politicians certainly are. They've been trying to collect money from your online purchases for years now, and even though they keep failing on the federal level, with Sens. Mike Lee and Orrin Hatch voting against it, state politicians are redoubling their efforts this year.

Here in Utah, State Sen. Curt Bramble announced a plan earlier this month to enforce collection of the sales tax on every Internet purchase Utahns make.

That's bad news for anyone who shops or sells on the Internet — which is almost all of us. The good news is this Internet tax-grab, like the many other attempts before it, can be stopped.



Some legislators want to apply the 4.7 percent sales tax to all online sales. In turn, those of us who make purchases online, regardless whether the vendor has a physical presence in our state, would have to pay up. The same goes for Utah businesses that sell products over the Internet — they'd have to collect sales taxes, regardless of whether their client lives here.

The overall effect of this tax would be to make our state a costlier place to live and do business. Those who look to online shopping for affordable prices and good deals would quickly be disappointed.

Utah businesses, meanwhile, would have trouble remaining competitive — they'd have to charge and collect taxes that retailers from other states don't, immediately putting themselves at a disadvantage.

That may not be a problem for big retailers, but smaller businesses would have trouble keeping up with lost sales, not to mention complicated and time-consuming tax collection rules.

The only ones who would really benefit would be state lawmakers, who would have more of our hard-earned money to use as they see fit.

But another tax grab is the last thing we need. Recently, the Tax Foundation released a report on the states with the largest tax burden and according to their research, every single one of our surrounding states from Nevada and Colorado to Arizona and Idaho has a lower tax burden than we do in our state. Per capita, Utahns already pay more than $3,000 a year to the state government — that's a lot of money!

Legislators claim that their proposal will be "revenue neutral" but if the plan really was "revenue neutral" its hard to imagine why legislators would be pursuing such a costly change to begin with. At the end of the day, the government wants more of our tax dollars and they know that forcing the collection of online sales taxes is one way to do it.

The last few years have brought surpluses in tax revenue in Utah yet there has been no conversation on how to reduce the tax burden to keep us competitive with surrounding western states. Instead, taxpayers watched as lawmakers voted to raise the property tax, the gas tax and the sales tax.

Luckily for some counties in Utah, Prop 1 failed to pass, but for other counties that passed it, families will start to feel their pockets getting lighter.

State legislators may mourn for tax revenue they believe is "lost" when we shop and sell online, but the fact is that this money was never theirs from the get-go. The best place for our hard-earned money isn't at the mercy of politicians, but rather in our pockets, where we can use it to contribute to the local economy.

Fortunately, legislators have limited legal standing to collect this tax. The Supreme Court has ruled numerous times that states could not expect businesses that didn't have a physical presence in a state to collect state sales taxes.

And we taxpayers have also indicated we won't stand for this new tax. According to a study conducted for the National Taxpayers Union, strong majorities of Utahns oppose new online sales taxes, and over 50 percent want elected officials to oppose such laws.

As is always the case when lawmakers think we need to pay more taxes, they've got it backwards. Before state legislators look for a new way to raise money from hard-working families, they should apply a careful eye to eliminating waste and inefficiency in government spending. The taxes we already pay are more than enough to fund government services. Legislators like Bramble might be surprised by how much they have to work with if they use our money more carefully.

Utahns look to the Internet as a valuable place to shop and do business — for many of us, it's a new economic frontier. The last thing we need at that frontier is the tax collector setting up shop.

Evelyn Everton is the Utah state director of Americans for Prosperity.

 

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