Sales tax on Web purchases could be coming

(CBS News) WASHINGTON - Congress is considering a bill that could result in a sales tax of five-to-ten percent on purchases made via the Internet, bringing prices on such buys in line with those at brick-and-mortar stores.

For years, "brick and mortar" stores such as Walmart and Target have been trying to get their online competitors, such as Amazon, to require their customers to charge sales tax.

And for years, the online companies blocked those efforts. But the momentum appears to be shifting, and online shopping could soon become more expensive.

A bipartisan bill before Congress would allow states to decide whether to tax online sales.

U.S. consumers spent more than $200 billion shopping online last year.

Fifty-three percent of Americans let their fingers do the shopping, averaging about $1,200. By 2016, 58 percent are expected to take the plunge, spending more than $1,700 dollars apiece.

Supporters of the legislation, like Sen. Lamar Alexander (R, Tenn.), insist it's less about raising taxes than it is about states' rights.

"Let's get out of the way and let states make their own decisions, and then the states can decide from whom they want to collect their sales taxes," he said on the Senate floor recently.

And he's getting help from some unlikely sources. At least a dozen conservative Republican governors, who are usually fervently anti-tax, now back giving states the power to tax online sales.

Why? Partly states' rights -- but it's also because their budgets are so squeezed, they need the money.

If the bill becomes law, an estimated $23 billion is expected to flow into state coffers, according to the National Conference of State Legislatures.

Steve DelBianco is executive director of NetChoice, which represents Internet companies. He says the bill would mire thousands of small online businesses in a nightmarish web of new taxes.

"The big loser(s) (would be) small businesses," DelBianco asserts, "the same small businesses we're counting on to create the jobs to pull us out of the recession."

Alexander says the change in momentum on this issue is so profound, he's confident the measure will become law by next year at the latest.

To see Chip Reid's report, click on the video in the player above.

  • Chip Reid

    Chip Reid is CBS News' national correspondent.

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