CSE Foundation Opposes NGA Internet Tax Plan

Today, Erick Gustafson, Director of Technology Policy at Citizens for a Sound Economy Foundation, made the following statement in response to the National Governor’s Association proposal to tax the Internet:

“Today Governor Leavitt and the National Governors Association (NGA) unveiled a proposal of complicated tax policies for America’s leading engine of economic growth. While the NGA proposal is aimed at “simplicity and fairness,” it will ultimately offer American consumers multiple levels of taxation and bureaucracy that, together, will limit the growth of the Internet and the consumer benefits that go along with it.

“Under the NGA proposal each Internet sale will, in essence, be taxed three times. Once for the sales tax itself, once to pay for the collection of the tax by the Trusted Third Party, and a final time to offer incentives for retailers to enter the system. Consumers are hit time and again in the pocketbook in this over-reaching proposal.

“Worse still, the NGA would create a new bureaucracy, a Trusted Third Party or TTP, to determine and collect the appropriate sales tax for Internet retailers. In order for the NGA’s system to be accountable should consumers inadvertently overpay their tax obligation, the governors call for the establishment of a database to record all retail Internet transactions. For anyone familiar with the works of George Orwell or anyone who has followed the recent controversy over the selling of driver license information, the idea of a national database containing every online purchase made in America is chilling.

“This system may be simpler and easier for the regulators that designed it, but in the long run it will limit consumer choice and the growth of the Internet. Citizens for a Sound Economy Foundation and our 250,000 members encourage the governors to go back to the drawing board and design a system that is consumer and Internet friendly. We strongly encourage the Advisory Commission on Electronic Commerce to reject any proposal that would subject American taxpayers to multiple levels of taxation and bureaucracy.”

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