In this time of economic struggle, everyone is searching for ways to find additional money. The government is in the same boat and now, and the Internet may become the latest target for taxation.

 

For many, shopping online has significant appeal as taxes generally are not levied on a number of products. Now, a growing number of states are looking into laws that will tax digital goods, such as iTunes songs, Amazon MP3s or electronic books.

A CNet report highlighted that such a move many send a mixed message as governments continue to say they want to encourage broadband adoption. If it is viewed by many as a way to levy additional taxes, support may quickly wane.

According to a Reuters (News - Alert) piece, government officials and politicians are not the only ones pushing for this tax. A trade group representing U.S. shopping centers has called on the government to enact legislation to prevent states and local governments from losing sales tax on Internet purchases.

The group is relying on a study from the University of Tennessee that predicts local government sales tax revenue will fall as much as $12 billion by 2012 as a result of the inability to capture Internet sales.

A piece on Globe St.com took a closer look at this study. “Clearly the results of the study points to the need for Congress to enact legislation that will allow states to collect taxes from out-of-state sellers while promoting simplification and fairness in the administration and collection of sales and use taxes,” says Betsy Laird, ICSC vice president of global public policy.

In 1992, the U.S. Supreme Court ruled that retailers that use catalogs and other means to sell products to customers in another state could not reasonably be required to comply with the variation in tax rates and rules in force across thousands of state, county and city jurisdictions.

A second CNet report said that a bill is expected to be introduced in the U.S. Congress as early as Monday. If successful, this bill would rewrite the ground rules for mail order and Internet sales through the elimination of what supporters view as a “loophole” that allows millions of Americans to shop without paying sales tax.

If this type of legislation were to be successful, it would likely change the entire face of Internet purchases and therefore, change the market itself. Far more people would be negatively impacted by such a change than the benefit that it is expected to provide.