US Senate to vote on online sales tax bill

The US Senate will today vote on a bill that would give local governments' additional revenue by charging sales taxes on all internet purchases, a move that will add as much as $11 billion to states' coffers every year.

The bill, called the ''Marketplace Fairness Act of 2013'', has been advocated for years by shop owners and local legislators, but vehemently opposed by online retailers.

Currently, online retailers do not include sales tax on online purchases, though buyers are supposed to keep an account of all purchase made online and estimate how much they should have paid each year and include it with their annual tax returns.

But very few Americans do it since they are not even aware of this rule, while states that collect online sales taxes, usually do it on companies that have a physical presence in the state, like an office, warehouse, distribution centre or affiliated companies.

The bill to be introduced by Senator Mike Enzi – a Republican from Wyoming, would give states the authority to collect taxes from retailers from differnt states selling goods to local residents.

New York was the first state to collect such taxes by passing the so called ''Amazon tax'' in 2008, which compelled the online retail giant to collect sales taxes from shoppers who live in the state, even though the company did not have a physical presence in the state.

New York's success was soon implemented by nine other states, including California, Pennsylvania and Texas, which forced Amazon to toe the line.

Many Senators feel that the bill has the support of majority since members had in March approved the idea in a 75 to 24 in a symbolic vote.

The bill is also supported strongly by several retailers including, Barnes & Noble, Best Buy, Gap, Wal-Mart, Macy's, who argue that online retailers enjoy an unfair competitive advantage over them since shoppers flock to the Internet since goods are cheaper due to no sales tax.

But like any other legislation, this bill also has its share of opponents like online retail king eBay, the Heritage Foundation, and Americans for Tax Reform among others, but surprisingly supported by Amazon.

In a letter sent last week to Senators by David French, senior vice president of the National Retail Federation, which has retail giant Wal-Mart as its member, wrote, ''The Marketplace Fairness Act is a commonsense piece of legislation necessary to modernizse our federal and state understanding of sales tax laws so that they can keep current with real-world changes in the marketplace.''

Reuters today reported that eBay CEO, John Donahoe, yesterday sent e-mails to its users urging them to get in touch with their local Senator and express their opposition to the Marketplace Fairness Act.

Donahoe, who has singled out Amazon, has argued that the proposed tax will burden the small retailers.

"This legislation treats you and big multi-billion dollar online retailers -- such as Amazon --exactly the same," Donahoe wrote in the e-mail. "Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer."

But analysts feel that users may not heed Donahoe's warning since many feel if one has to pay sales tax on goods bought in shops, why not on online purchases.