Online sales tax may be option for California fiscal crisis.

Legislators in California, some of whom have historically opposed a sales tax of online purchases, are now rethinking their stance, mostly due to the $35 billion budget gap. This fiscal crisis is one of the worst in the state’s history and lawmakers, including Governor Gray Davis, are willing to consider almost any option to take care of the problem. While some companies have been able to avoid collecting online sales tax by using a bricks-and-mortar system, that loophole would be closed with the proposed bill. It was noted that some companies are not waiting for states to decide how they plan to begin collecting the tax. Several companies such as Wal-Mart and Target began voluntarily collecting their own tax for online purchases in return for immunity from owing any back taxes. (San Jose Silicon Valley Chamber of Commerce Annual Power Lunch; Fact Sheet on S.B. 103; Miscellaneous interviews with spokespersons from US Internet Industry Association, Governor Gray Davis, and NCSL.)

Posted on April 15, 2004