States taxing "digital goods"

[unixronin]

States have figured out that people are spending money to buy digital “goods”, and naturally they want “their” share.

Including Mississippi, at least 18 states claim they have the authority to collect taxes on digital goods, and more are likely to join them.

On March 12, a bill was introduced in the North Carolina general assembly “to modernize the sales and use tax statutes by treating music, movies, books, and computer software that are delivered electronically the same as those that are purchased in a tangible medium.”

A digital goods tax measure was also introduced in the Minnesota House of Representatives in late March.  The bill could raise the state more than $8.2 million in 2010 through 2013, according to the Minnesota Department of Revenue (PDF).

Comments

[pernishus.livejournal.com]

What the GST (goods and services tax here in Canada -- thrice-cursed be the name of Brian Mulroney, who introduced it back in the 1980s) does is suppress demand for goods and services -- not exactly what you want to have happening in the midst of a recession, one would think. I can't count the times I have refrained from buying something at Sears or the Bay, for example, once I add the 15% onto the advertised price... it's one of the reasons I'm postponing purchase of a refrigerator at this very moment, actually...

GST

[ewen]

Here in New Zealand, where we've had GST for 25 years, consumer goods are advertised including GST and all taxes. Any retailer trying to do otherwise when advertising consumer goods gets spoken to by the fair trading authorities and told firmly not to do it again. (I think a few may have been prosecuted for misleading advertising early on, but not IIRC in many years.)

As such there is some suppression of demand (because things cost more than they otherwise would have done), but there isn't the "I could afford that, wait no I can't when I add the tax" effect. Few if any consumers know or think about the "without GST" price.

Re sales tax on "digital goods", New Zealand has done this from the beginning. AFAICT the only reason that the USA put a temporary hold on doing so was because of the difficulty of dealing with the jurisdictional issues (whose sales tax applies, at what rate, etc). The net result is to provide a disincentive to purchase at "brick and mortar" stores since they have to charge sales tax, and the online stores do not. Which isn't an ideal thing in a recession either.

Ewen

Re: GST

[house-pundit.livejournal.com]

Yeah, but here in the US, we have a tradition of being cantankerous about taxes. You might have heard about it. LOL