Europe updates its monitoring of fiscal and taxation developments concerning online sales and digital commerce in the US and EU.
US state and federal legislation to institute sales tax on online inter-state sales, to fund road and bridge repairs
In the United States, sales tax and user tax is the prerogative of state or local government. It is levied on the final end user at the point of purchase, just like VAT (Value Added Tax) in Europe and elsewhere, though the latter is the prerogative of national government.
In America, states are considering bills to levy sales taxes on inter-state online sales that would be used to pay for the repair of roads and bridges in the state. Online retail sales are increasing, and it is argued, to the detriment of conventional retail trade, while they do not bring in the same fiscal revenue. The state of infrastructures, including roads and bridges, has been decried in various places, and requires precious public funds.
However, online sales generate business and jobs and other benefits, so the debates are heated in all states, notably Mississippi, Utah, Wyoming, Virginia, Nebraska, and New York.
The New York state assembly delegation representing Brooklyn is fighting Governor Cuomo’s “budget proposal to require online marketplaces like Etsy and Amazon to collect sales taxes on any transaction involving buyers from New York”, writes the New York Daily News. “Cuomo’s plan, said to be the first in the nation, would require online marketplace providers like Amazon, Etsy, and eBay that process a minimum of $100 million in sales a year from New York buyers to collect sales taxes on behalf of third parties who use their platforms and are located outside of New York, but sell goods to state residents.”
Meanwhile, at the Federal (national) level, several legal initiatives are underway, since some time, but both the Marketplace Fairness Act (MFA) and the Remote Transactions Parity Act (RTPA), which authorize states to mandate remote sales tax collection under certain conditions, haven’t reached the House for a vote, are “stuck in the Judiciary committee”. The “Online Sales Simplification Act (OSSA), which authorizes collection, but bases the taxation of remote purchases on the seller’s location and the tax rate of the consumer’s location” (August 2016 draft ) has not been formally introduced yet, according to BNA – Bloomberg.
Europe : e-commerce VAT recently simplified and made fairer, not applied to e-publications
In Europe, there is a separate regimen for VAT on online sales (“e-commerce”), which was recently the subject of an EU ruling to simplify and make it fairer. See our earlier post Tax changes affecting the digital economy of 18 December 2016
The measure included a proposal to extend the VAT regimen afforded to printed publications (intended to encourage reading), to e-books and e-publications. The European court of justice has rejected the latter provision, and judged they should be subjected to the same VAT rates as other online sales.
EXCLUSIVE: Cuomo budget’s sales tax for Amazon, online marketplaces rebuked by Brooklyn Democrats, BY KENNETH LOVETT , NEW YORK DAILY NEWS Monday, March 13, 2017
WDAM “Lawmakers explain legality of internet sales tax” Saturday, March 11th 2017