Studies examine Internet taxation

As the Advisory Commission on Electronic Commerce sits down for its third of four scheduled meetings Tuesday in San Francisco, the group's members, which include government and business heavy hitters, will have plenty of new ammunition to fire at one another.

Congress formed the group late last year to recommend if or how an Internet sales tax should be applied.

With just two meetings left to reach a consensus, the commission is as divided as the results of some studies released Monday.

To read the National Association of Counties study prepared jointly with the U.S. Conference of Mayors, one would think Americans are lining up to pay Internet sales taxes.

According to the study, 58 percent of 1,000 Americans surveyed said they would support a sales tax in their community on goods bought online. And 72 percent of the respondents said it is not fair that local retailers must collect sales taxes while Internet retailers do not.

Meanwhile, BizRate.com, an electronic commerce World Wide Web site, surveyed nearly 17,000 online shoppers and found, not surprisingly, that that 60 percent of them would make fewer online purchases if they had to pay sales taxes.

And in Iowa, the conservative Progress&Freedom Foundation found that 51 percent of residents believe Internet sales should not be taxed in a poll called "Digital Iowa: How Citizens Assess the Digital Revolution."

As it stands, state and local government officials fiercely oppose sales tax-free online transactions. They fear that shoppers will be driven away from bricks and mortar stores, which in turn would dry up the sales tax revenue most municipalities depend on to pay for basic services. They're joined by retailers who think their online brethren should pay the same sales taxes as they do.

However, a core of largely conservative lawmakers wants to maintain the Internet tax moratorium, arguing that it has helped promote the technology industry, in turn bolstering the nation's strong economy.