Nevada lawmakers look for ways to collect tax on Internet sales

Tuesday, Dec. 14, 1999 | 11:36 a.m.

CARSON CITY -- Sales over the Internet are booming and that worries some state legislators who see a significant loss of tax revenue.

Sales tax is not being collected from these e-commerce purchases, says Sen. Mike Schneider, D-Las Vegas. And 38.5 percent of Nevada's revenue comes from the sales tax.

"We're going to be really damaged in the future if we don't get moving," into a system to make sure the state doesn't lose this money.

Sen. Jon Porter, R-Boulder City, said the impact is greater than just on government.

"Small business can't compete," he said. "They have to charge a sales tax when somebody in New York does not."

He suggested there may be a need to give incentives to small business to help them in the future.

The discussion came at a meeting of the Legislative Commission when Schneider reported on topics discussed at national conventions of lawmakers.

After the meeting, state Taxation Director David Pursell said there's a federal law that prohibits the state from imposing any taxes on Internet sales for three years until a study is done. He said he does not have an estimate on how much Nevada might be losing in sales on e-commerce.

But he said he and Gov. Kenny Guinn were monitoring the situation. Guinn, Pursell said, is a member of a taxation committee of the Republican National Governors Association.

Sen. Ann O'Connell, R-Las Vegas, said Nevada is in the same boat as five other states that heavily depend on sales tax for their revenues. She also said there is a substantial amount of money lost in catalog sales.

Schneider said lawmakers should follow this issue. "We're going to be asked to change our laws and it will come pretty fast," he said.

There are a myriad of problems in taxing the Internet. States have different sales tax rates. For instance Oregon doesn't charge a sales tax.

Schneider said there is some thinking that computers will be given away free in the future as long as people sign up for the Internet. "Everybody will be able to purchase through their computers. And everything will be delivered to their home."

But Assemblywoman Sandra Tiffany, R-Henderson, said there is concern that government interference could slow down commerce. Some national legislative organizations, she said are advocating a "hands-off" policy towards the Internet.

But O'Connell said the majority of states are not faced with the same problem as Nevada with a big share of its tax revenue coming from sales. She said the lawmakers cannot go into the next session without some type of a plan to correct the problem.