USE CAUTION IN THE INTERNET-TAXATION DEBATE

As the technologies that are transforming our lives race ahead, none is having more impact than the Internet. In a few short years, this incredible new communications medium has become a forum for, among other things, shopping for virtually anything. Inevitably, a hue and cry has arisen to tax Internet sales. We understand why some are alarmed but will take this opportunity to urge caution before rushing into new taxation.

It should be noted that federal, state and local coffers are overflowing as never before. The federal budget is in surplus. So is every state's, with Missouri now in the fourth consecutive year of refunds. And Cape Girardeau County's revenues are up 4.7 percent year to date over last year. Many who oppose excessive taxation cite this as support for no action here.

We urge all involved in this debate to take notice of the complexity of this issue. Currently, catalog sales made over the telephone aren't taxed, at least not effectively. While such transactions are exempt from sales tax, Missouri buyers from an outstate seller are supposed to pay something called a use tax if they buy more than $2,000 annually. Few do. Meanwhile, is it the buyer's or the seller's state that gets to collect the tax? This brief discussion just hints at the many complexities involved.

The need for tax fairness for all merchants, both online and traditional, is driving discussion of how to level the playing field. And it is here that these very complexities are leading to what is beginning to resemble an early form of consensus on this issue. Congress recently chartered a 19-member commission, the Advisory Commission on Electronic Commerce, which is wrestling with the issue. The panel has been sharply divided when it comes to Internet taxes.

As an informative Wall Street Journal article put it this week: "One expert witness, Hoover Institution economist Charles McClure, said a radical simplification' of state sales taxes in exchange for stronger collection enforcement could provide the basis for a compromise on the sharply divided panel. ... South Dakota Gov. Bill Janklow, who is leading a drive for simplification within the National Governors Association, said more uniform rules might make compliance so much easier that companies will begin voluntarily to start collecting levies they currently can't be forced to impose on out-of-state users."

Certainly all involved should understand the concerns of traditional merchants and local government leaders. Also, it is worth keeping in mind that an unfettered Internet is a huge spur to growth in our economy. Already it is a major contributor to overflowing federal, state and local coffers. It is our hope that a compromise can emerge from the commission with which all can live.