It’s looking promising that states still will not be able to impose new taxes on internet access. According to Wired, the moratorium on that is likely to be continued.

The reason for this is that such a tax could seriously impact the number of people who use broadband internet, and slow the development of more broadband services.

Various economic studies show that a 1 percent change in the price of broadband leads to changes in subscription between 1.5 percent and more than 3 percent, Ellig said.

That’s a pretty big change, especially when you consider that states charge about 10-20% in taxes on telephone services. Do that to broadband internet and you’re potentially facing a major drop in usage.

But there are still chances for other kinds of internet taxes. States always want to protect local merchants and get the taxes they consider to be due to them. Talk of requiring online merchants to collect state sales taxes comes up periodically, for example.

This issue is very important for people working online. If you’re an affiliate, it will impact your merchants far more than you if sales taxes need to be collected by online merchants, but if you sell something subject to sales tax, collecting it for the various states could be quite a burden.

My own feeling on the sales tax issue has always been that it should be treated the same way catalog purchases always have been. There are enough similarities that I think this is reasonable.

I do expect that through the years there will be tax issues to deal with online. Exactly how they come about and what they will be for, I don’t know. But it pays to keep an eye on these things.

Technorati Tags: , ,