OP-ED — Haley Barbour makes the case for taxing online sales

The authority of states to enforce their current sales-tax laws with regard to online sales has emerged as a hot topic in recent months. In opposing the Marketplace Fairness Act, some of my fellow conservatives have made the suggestion that for the U.S. Congress to allow states to enforce their existing laws on remote sales would amount to “taxation without representation,” because the retailer is in another state. That basis for opposition is ill-founded.

First, sales taxes are not paid by the retailer, but rather by the purchaser; the seller only collects the appropriate levy and remits it to the state. In the 45 states with a sales tax, if the retailer doesn’t collect the sales tax at the time of purchase, the purchaser is legally required to pay a “use tax” to the state. Many consumers don’t realize this or choose to ignore it, and, as a result, no taxes are paid on most online purchases. And as any brick-and-mortar retailer will tell you, the price advantage of “tax free” shopping distorts the free market, providing online retailers an unfair 5 to 10 percent pricing advantage over the local storefront.

8/23/12
National Review