Nevada governor to support Net sales tax bill

CARSON CITY - Gov. Kenny Guinn will support a bill during the legislative session next year to impose sales taxes on products Nevadans buy over the Internet.

Scott Scherer, the Republican governor's chief of staff, said that Guinn's support of Internet taxation doesn't break his ''no new taxes'' pledge because he considers sales taxes an existing form of taxation.

''He thinks it only fair to collect taxes equally on all types of sales, including Internet sales,'' Scherer said. ''Brick and mortar companies make investments and employ people in the state and they have to charge sales taxes.''

A University of Tennessee study earlier this year estimated state and local governments will lose $10.8 billion in sales tax revenue in 2003 because most Internet companies do not collect taxes.

Nevada's loss was estimated at $191 million, about $60 million of which would have gone to the state government. The remainder would be divided about equally between schools and local governments.

A U.S. Supreme Court decision requires the collection of sales taxes from people who purchase items by catalog - as long as the catalog company has a physical presence, such as a store, in the buyer's home state. The decision has been interpreted to apply to Internet companies that also have stores in the state.

''States are going to miss out on a great deal of revenue if we don't do this,'' said Assemblyman David Goldwater. ''We will be doing an injustice to the retailers in our state if we don't. This is not a partisan issue or a new tax.''

Goldwater commended Guinn for his stance on Internet taxation. As chairman of the Assembly Taxation Committee, Goldwater plans to introduce an Internet taxation bill when the Legislature opens in February.

Although in theory sales taxes are owed on all Internet and mail-order catalog purchases, the Supreme Court ruled in a 1992 decision that states can't mandate companies without a presence in a state to assess sales taxes. States can only ask them voluntarily to collect the taxes.

The court held that since Congress regulates interstate commerce, it can require all Internet and mail-order companies to collect sales taxes for the states.

Congress has not taken action. It passed the Internet Tax Freedom Act in 1998 that imposed a three-year moratorium on new Internet access fees and new state or local taxes that specifically target the Internet. The act expires in October 2001.