Report says Internet sapping away sales taxes from state

A new report says mail-order sales over the Internet are costing billions in local sales tax that isn’t collected by states, and Iowa’s share is reportedly 112-million. Marshalltown State senator Larry McKibben says one problem is, trying to collect it would be hard on Main Street shops, too.Like an Alabama citizen would make a merchant send sales tax to some other state if he buys something here, and some states would like to make us do that. McKibben agreed that trying to collect the lost sales tax from cyberspace orders would be too much of a hassle.He says they’d have to hire a lawyer, bookkeeper and spend lots of time and work on what amounts to another government mandate. But the president of the Iowa Retail Federation says local businesses already are disadvantaged because they have to collect sales tax. He says it hurts Main Street retailers, since sales tax forces them to charge five-percent or more over the price on the Internet. Jim Henter says shopkeepers already pay property tax and their workers pay income tax, so lawmakers should make their Internet competition collect sales tax. But heads of both the state senate and house tax-writing committees have indicated they don’t favor trying to collect sales tax on Internet purchases.