An Unavoidable Tax

Online shoppers could be forgiven for overlooking a California court ruling last month that might end the tax-free joyride they've been enjoying on the information superhighway.

The appeals court ruling said megabookstore Borders Inc. had to pay $167,000 in taxes that it owed based on Internet sales from 1998 and 1999. The reasons are complicated and experts disagree on the results. Looking at the big picture, however, it appears that somehow, sometime in the future, most people who buy things online will pay taxes.

State governments, Internet shops, Congress and consumer and anti-tax groups are treating this issue with extreme concern. With billions of dollars a year at stake, they can't afford to ignore it.

And, as one analyst argues, shoppers won't even notice the difference.

"It's not that big a deal to consumers," Jupiter Research analyst Patti Freeman Evans told the New York Times, "so there will be little loss." The Times also cited a Jupiter study that said 9 percent of consumers would buy less or stop buying from a store that charged taxes on their Internet sales.

That's a bold assertion considering how many of the millions among us root for bargains with a ferocity that would startle jackals. In North Jersey a few weeks ago, I saw gas stations hawking regular around $2.05 a gallon. Two stations dropped their prices to $1.92. That 13-cent difference would have saved me $1.30 in my Saturn. A Ford Expedition driver would have saved $3.38.

You guess where the long gas line was. I would have burned up the savings just idling in line, but that's the advantage we get from a lower price.

But Evans is probably right. As much as we dig around for slivers of savings in the gas line, we also drive as much if not more when gas prices climb toward $3 as when they slink around $1.50. So if taxes tack on a few extra dimes or dollars to our purchases, of course we're still going to pay. We might resent it, but what are we going to do? Not buy stuff?

It reminds me of the comments that I received after writing a story for The Washington Post last Thursday on how Alexandria, Va., will start charging a local tax on cell phones. Nearly everyone I spoke to during and after the story's publication said variations on the same thing: "Nickel-and-diming us to death! What is the matter with them?"

No one said they would stop using their cell phones. They are part of our lives.

Internet shopping hasn't permeated so much into our society, but it still accounted for $66 billion in 2004, according to ComScore Networks -- and that doesn't count travel and auction site spending. And once people do it a few times, they discover that it's a drag to stop.

Here's another point that Evans made, as reported by the Times: "[Most] land-based retailers, like Wal-Mart and Macy's, already collect sales taxes for all online purchases, since they want to offer services like in-store returns for their dot-com customers, and use their stores to help promote the Web site."