Survey: Consumer Opposition to Net Taxes Is Soft

Only a slim majority of Americans oppose paying taxes on Internet purchases, a recent survey of consumer attitudes toward Internet taxes shows, and the percentage declines when people are asked to consider factors such as the way mail and telephone orders are treated and the use of sales taxes for local services.

The telephone survey of about 1,000 people sponsored by the Washington-based Internet Consumer Organization was conducted in mid-November and the results were released yesterday. The survey aimed to dig deeper than other probes into what people think of taxing Internet purchases, said Peter Gray, chairman of the nonprofit organization founded in March last year.

"We wanted to debunk statements that have been made by others who say it will be the end of the world if Internet purchases can be taxed," Gray said.

The survey, however, showed that among people who have Internet access, 58 percent opposed an Internet sales tax. The number against sales taxes was even higher -- 66 percent -- among people who have bought something over the Internet.

Gray said those higher percentages weren't surprising given that the type of people who go online tend to be younger and more libertarian. More research would be needed to determine whether the online participants' views would change when asked to consider certain factors, he said.

Overall, when people were asked how they would feel if their Internet purchases were taxed the same way catalog and telephone orders are taxed, the number opposed to a sales tax dropped. It also dropped when people were asked whether they would agree to pay sales tax if the money were used to pay for better roads, mass transit systems and better schools, Gray said.

Forty-seven percent said they favored an Internet sales tax to be fair to mail and telephone order companies, which currently must charge sales tax, if they have a "physical presence" in the state where the buyer is located. Some companies have interpreted that to include their Web servers. Forty-one percent remained opposed and the rest had no opinion. A slightly higher number -- 48 percent -- said they would favor an Internet sales tax to fund better schools and transportation systems, and to enhance state and local services. About the same percentage of people either opposed the tax or had no opinion, Gray said.

"If you ask them the fairness question and the utility question regarding money used for local services, that further weakens the opposition" to Internet sales taxes, Gray said.

Funding for the survey came from general funds of the Internet Consumers Organization, Gray said. It was conducted by Fabrizio, McLaughlin and Associates.

Taxation of online shopping has moved up on the agendas of many legislators, as local governments express concern over the erosion of their tax base.

The Internet Tax Freedom Act signed into law in October of 1998 imposed a three-year moratorium on new Internet taxes, but a commission also created under the act is working on recommendations to Congress. The commission met in San Francisco three weeks ago to debate several proposals, but failed to reach consensus. It is scheduled to meet again in March.

The Internet Consumers Organization was formed to provide policy positions on issues important to Internet consumers, including fraud, security, access and taxes. The organization receives funding from businesses, foundations and individuals.

The Internet Consumer Organization, in Washington, can be reached at +1-202-342-9034 or found on the Web at http://www.internetconsumers.org.

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