While the question of Internet taxation is far from a settled issue, a new possibility has been thrown into the picture: Wisconsin Gov. Jim Doyle's next budget includes a provision to require Wisconsin residents to pay that state's sales tax on goods like movies, music, e-books, and art that they buy and download from the Internet.
Doyle's proposal had barely come to life when he was attacked by at least one state lawmaker. "The next time you download the latest song from U2 for 99 cents," fumed state Rep. Scott Jensen (R-Waukesha), blasting Jensen for breaking a promise to balance the state budget without raising taxes, "the governor wants to charge you the sales tax. It's enough to give iPod users a case of 'vertigo'," alluding to the quartet's hit.
Wisconsin currently applies only computer software and digital photos among taxable Internet downloads. Doyle and other Wisconsin officials have said taxing music, movie, book, and art downloads would only level the playing field between cyberspace and brick-and-mortar sellers of those goods who now pay state sales taxes.
Jensen wouldn't budge on his opposition." At the same time Governor Doyle is trying to brand Wisconsin as a high-tech haven," he said of the Democrat, "he is working overtime to impose high taxes on electronic commerce."
Estimates thus far say Doyle's download tax proposal would mean an additional $3.2 million on those purchases over the next two years.
"If you are paying taxes in the real world, you should pay taxes downloading from the Internet," said National Conference of State Legislatures federal affairs counsel Neal Osten. "Consumers still owe the sales taxes. But the state is not going to go after the consumer."
Internet taxation has been a contentious enough issue ever since the federal government imposed a moratorium on Internet access taxes and rejected Internet sales taxes. A reported 21 states are part of a program of voluntary sales taxes involving out-of-state sellers voluntarily helping to collect sales taxes.
Olsten told reporters that the program would expand to include online downloads of movies, music, books, and art, as soon as the participants could agree on the details.
