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NewsFriday, October 19, 2007 11:27 PM CDT
Twin Cities missing out on taxes from sales over Internet
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NORMAL — Two-thirds of Babbitt’s Books business comes from Internet sales. “It’s an important role because it has to be,” owner Brian Simpson said. “If I didn’t do it, I wouldn’t be in business.”

While people buying his books over the Internet have to pay shipping and handling, they don’t have to pay local sales tax. Congress has yet to allow municipalities to charge sales tax on Internet sales.

That has Normal City Manager Mark Peterson concerned.

“It’s a challenge for all communities throughout the country,” Peterson said. “It’s putting a downward pressure on sales tax revenue all over. Internet sales are growing; more are taking advantage of it.”

And that takes money away from municipalities that typically use it to pay for day-to-day operations like garbage pickup, snow removal and public safety.

While commercial growth has helped offset the Internet sales tax loss in Normal, Bloomington has seen a dramatic dip in its sales tax revenue.

Bloomington City Manager Tom Hamilton agreed Internet sales are taking away local tax dollars, but he said he doesn’t know how much and “I don’t know how to find out.”

Simpson said he would much rather sell books at his store than over the Internet. And, he isn’t opposed to charging sales tax on Internet sales as long as it would be required for sales from big companies as well as small ones.

“I firmly believe paying taxes is the price of having civilization,” he said.

Peterson thinks it’s time Congress rethinks its policy or municipalities may be forced to look for revenue elsewhere — like property taxes.

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Reader comments on this story - 21 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

champaign wrote on Oct 21, 2007 11:54 PM:

" I just suspect that you people who are complaining would not call the police or fire service if you needed rescue. What ever happened to the "common good" that we all chip in to support. "

blago says wrote on Oct 21, 2007 6:45 AM:

" government never lives within its means. It is a giant sucking machine, never happy until it has everything. "

No sales tax wrote on Oct 20, 2007 6:43 PM:

" Looks like the cities need to find other ways to fund their projects or have less projects! "

Buying Online wrote on Oct 20, 2007 4:14 PM:

" I buy online to get items that aren't available in BN. It's not an effort to avoid sales tax because some retailers/vendors charge IL sales taxes because they have a presence somewhere in the state, just not BN. I buy Pear's Soap, 25 bars at a time, because I can't find it in BN. A store in New York City sells it for a reasonable price with reasonable shipping and no sales tax. "

to: I see greed wrote on Oct 20, 2007 3:37 PM:

" Why should you be exempt from sales taxes because you shop on the Internet? Why should someone who buys merchandise in a mall have to pay taxes, but not those of you who buy online? "

to DUBLIN DR wrote on Oct 20, 2007 1:28 PM:

" Er, the Internet tax ban passed the Democrat-majority house with no problems. "

the issue is... wrote on Oct 20, 2007 1:02 PM:

" this is a bill on Blagoyevich's desk right now, it really isn't fair for a local retailer to have to collect sales taxes for the state and local municipalities, when the same customer goes and buys the product off the internet from Indiana and doesn't have to pay sales taxes. Either collect sales taxes on everything or collect sales taxes on nothing...it is unfair competition. "

Had enough wrote on Oct 20, 2007 11:18 AM:

" I thought all our problems were going to be solved by taxing the cigarette smokers. Maybe that cash cow is about dry. Here's a thought - maybe the governing bodies - state and local - should spend a year looking at what they are funding and how they could save money by cutting out waste, etc. before coming up with a new tax. Why am I expected to live with less but they can't? And why is the answer to cut services instead of addressing waste and mismanagement? Before asking me for more of my money or coming up with yet another tax, how about showing me that you've done your part with what your already receiving!! "

Digs Deeper wrote on Oct 20, 2007 11:03 AM:

" Doesn't matter anyway as our constitutional rights are violated every single day as the constitution states that every person shall be equally taxxed..... That includes the producers of the products we consume as their is always a person or people that are being unfairly taxed at a higher rate than the next man. Just another way for big brother to dig deeper in our thinning pockets. "

DUBLIN DR wrote on Oct 20, 2007 10:49 AM:

" Dont worry. The democrats will have internet activity taxes when they get controll of the white house in 2008. Then this small business owner will have the burden of collecting and remitting for over 9,000 state/county and local taxes assessed in the US. "

Devil's Advocate wrote on Oct 20, 2007 10:25 AM:

" City Manager Peterson's not so veiled threat at higher property taxes is just one more attempt by an unelected beaurocrat to frighten the populace into their sheeplike slumber as every local taxing body and their hundreds of well paid, highly benefited employees prosper at your labors. "

a palimpsest tax wrote on Oct 20, 2007 9:51 AM:

" Figure that one out. Normal City Manager Mark Peterson. "

Think about it... wrote on Oct 20, 2007 9:07 AM:

" Are they really LOSING tax money from internet sales at this book store? Do you think the buyers are local and would be walking in to buy the books? If they weren't selling the books over the internet, they probably wouldn't be making the sales and no taxes either. Most internet sellers charge sales tax if you live in the state they are selling. "

Re Taxing used books wrote on Oct 20, 2007 8:04 AM:

" Why not just burn them. "

bob wrote on Oct 20, 2007 7:54 AM:

" I disagree bloomington normal's city budgets are overbloated and overpaid. No to internet tax. "

Forget it wrote on Oct 20, 2007 7:40 AM:

" The gov't already has it's hands too deep in our pockets, leave the net alone. "

Taxpayer wrote on Oct 20, 2007 7:36 AM:

" Oh, I think the various McLean county taxing entities are very good at utilizing property taxes. I'm waiting for increases from the Unit 5 Swimming Pool Foundation, the Heartland Athletic Complex and Conference Center, and the Big Judy and hope I'm living far away before they pass. "

Normal wrote on Oct 20, 2007 7:32 AM:

" Taxation without representation. Lets squeeze the last few droplets of blood money from a small business owner. "

Another tax? wrote on Oct 20, 2007 7:30 AM:

" Why should someone who does not live here have to pay a local sales tax? How will they benefit from the tax? Sounds like more money for the city to waste. If such a tax is implemented, it should be a fraction of the normal sales tax, say 1 or 2% to reflect the value returned to the buyer for paying the tax. "

avoid the tax man wrote on Oct 20, 2007 6:46 AM:

" Whenever possible, I specifically buy online so that I can avoid paying the sales tax on items. Even if shipping comes out to cost a little more than the taxes, I'd still rather pay that and have the satisfaction of keeping the USP or Fed-Ex guys in a well paying union job. I don't like what Bloomington or Normal do with my tax money anyways, so that's good enjoyment when I stick it to the man that way. "

I see greed~~ wrote on Oct 20, 2007 2:20 AM:

" rolling it ugly head! Once again they want to dig deep in people's pockets to get all the money they can. It's not our fault stores don't have online service. I shop on line because I can't get out to shop, so if you don't get what you want you will jump on others that shop the only way they can. Get over it Mr. Hamilton, you need to worry about the dinosaur on the corner instead of the little people. "

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