Online Sales Tax Plus Jindal Plan Could Mean Perfect Storm [POLL]
There is talk about enacting laws requiring online shoppers to pay sales taxes to the state they live in. This would mean every online purchase you make, whether it is buying a coat from Maine-based L.L. Bean, a TV from Arkansas-based Walmart or buying from Pennsylvania-based IKEA USA, you will have to pay sales tax to your state of residence. So, if you live in Louisiana, you pay Louisiana. Live in Texas, you'd pay Texas.
How would this work? Basically, online retailers would have to collect sales taxes for each state in the country. Meaning, a company who wants to sell products online would have to pay sales taxes to every state that has a resident who purchases a product.
But wouldn't it make more sense to tax based on where the company maintains a physical presence? Every online business has to have a physical presence somewhere. You can't operate without one. Whether it's a warehouse or a living room, there is a physical existence somewhere.
And we can't forget: sales taxes in Louisiana could be going up if the Governor Jindal tax reform becomes a reality. Meaning not only could Louisianans be paying upwards of 12% sales tax at the convenience store, but end up paying 12% on online sales plus shipping and handling.
So rather than trying to have a company pay sales taxes to every single state in the union, wouldn't it make more sense for the company to pay its sales taxes to the states it operates in, like they do now? The only difference between that and what is done now is that everyone would have to pay the company's state's sales taxes.
But the question likely to arise is: Is this a 'sales' tax or a 'use' tax? A sales tax only applies to items sold in the state. A use tax applies to items used in the state, but bought elsewhere, which is still a fairly unreasonable request to make. This legislation would blur the term sales and use in terms of taxation because you would be taxed as if it is sold in the state, but the sales act like a use tax.
Right now, according to the Louisiana Department of Revenue:
If you purchased goods from out-of-state companies for use in Louisiana and were not properly charged Louisiana state sales tax, Louisiana Revised Statute 47:302(K) requires you to pay a Consumer Use Tax directly to the Louisiana Department of Revenue.
But in all honesty, who is going to [or actually remembers] about this law? And also, how reasonable is this request on the consumer?
I recently moved here to Louisiana from New Hampshire, am I supposed to list every single item I am bringing with me from New Hampshire and pay a use tax on each thing? New Hampshire is a sales tax-free state, meaning most of my purchases up there did not include a sales tax. My car, my laptop, television, furniture, accessories, everything I bought in New Hampshire would technically have to be listed and reported to the State of Louisiana. This is the process is many other states across the country, not just a Louisiana issue.
Do you tell the state everything you purchased in another state? Maybe you spent the day in Dallas and bought some clothes. Do you report that to the state? How does all of this affect local retailers in Shreveport-Bossier? This is an issue that will continue to evolve especially as Governor Bobby Jindal begins to unveil his tax reform plan and its impact on Louisiana's sales taxes.