State tax collectors want to start charging sales tax on the music, books and cellphone ring-tones you download from the Internet. Department of Revenue division administrator David Casey is pushing legislation that would charge sales taxes on things like "I-tunes" from Apple.
Casey says you pay tax when you buy a C.D. at a store, but not on the Internet. "We think there’s an inconsistency that needs to be corrected," Casey says. Casey says most states already charge sales tax on music and software downloads, and Iowa is just trying to catch up. Casey says businesses would be exempt from the tax on downloads.
He says most of the businesses download computer software, and there are a lot of exemptions for business inputs, and this would be considered another exempt business input. Casey estimates the state would collect an additional four million dollars in sales taxes next year if the law is changed. Casey says the tax code is "the 1930’s, this is the two thousands, there’s a lot of inequities in the tax code."
But the president of Iowans for Tax Relief is skeptical of Casey’s figure, and says the state would probably spend more money trying to enforce the tax than it would actually collect. Jeff Boeyink says I-T-R opposes taxing internet downloads because they don’t want to stifle on-line commerce.
The president of the Iowa Taxpayers Association, Ed Wallace, says the change would be good for businesses who must compete with on-line music says, but bad for consumers. Wallace says right now his organization is just monitoring the bill.