Just about every parent knows you can never have enough diapers. The current price of diapers at Wal-Mart is $24.94 add tax to that you come up with around $26.44 plus all the time and hassle to go to the store buy them. That comes to about .30 a diaper. Wal-Mart is kind enough (ok, they have to) collect the 4% state sales tax and the 2% for the city and pay that obligation for you.
Most of us are looking to save a few dollars, and some time, a quick bounce out to Amazon.com and we find the same product in bulk for much less, about .20 per diaper, And you don’t have to go to store, they deliver to your door. What about that sales tax? Because Amazon.com does not a physical presence in South Dakota, they do not have to collect it. However, the $1.89 in sales or use tax is still owed to the state.
What we are suppose to do is keep track what we buy on-line and from catalogs,then on April 15, pay what is owed to the state. Most of us don’t, it took some digging just to find the form. It would cost the state more than what it collect to track down and collect that $1.89.
According to Representative Hal Wick(R), the state is missing out on about $14,000,000.00 of uncollected sales/use tax. How should the state collect this?
The easiest way on the state’s side is to require on-line/catalog/remote seller to collect the sales tax. The State of Colorado did that, and it didn’t turn out so well, E-bay, overstock.com, Amazon and several other E-tailers sued Colorado. Amazon closed the accounts of its partners in Colorado. Is this a fight we really want to get into?
So far, most people haven’t paid this use tax, why not let people keep it or make it paying optional? Maybe even do away with paper form and have an easy online form with credit card payment.
Of course, there is always the option of the Fair Tax. While this might be a good idea, it isn’t getting much traction in congress.
Coming to a ballot near you this November is an initiated measure to increase sales tax to pay for education and health care. Do we really want and need this extra tax, when there is this much uncollected tax?