If you buy a screwdriver at your local hardware store, you pay tax.
If you buy a screwdriver through the Internet, you might not pay tax — unless the seller collects it due to a physical presence in Pennsylvania. Oh, you could be virtuous, write down the purchase and send the sales tax along to Harrisburg each quarter, as the law requires.
But nobody does that.
The situation is a loophole.
Closing that loophole would not be a “new” tax. It would simply put bricks-and-mortar stores on an equal footing with Web-based merchants.
And it would give Pennsylvania badly needed revenue.
• Pennsylvania’s population under age 19 will drop by 1.9 percent by 2020. The working age population will stay the same. The senior population will grow by 21 percent.
So says Matt Knittel, director of Pennsylvania’s Independent Fiscal Office, the state equivalent of the federal Congressional Budget Office, as reported by the Patriot-News of Harrisburg.
Here is what journalists call the “nut graf,” or the paragraph that synopsizes the story: Fewer working age employees means a slower growing economy and fewer people paying income tax. Seniors are more likely to spend on non-taxable items — healthcare and medicine — than to buy stuff that brings the state healthy returns on sales tax, like a new car or furniture, Knittel said.
Increase revenue — through increasing taxes or closing loopholes.
Or cut spending by forcing senior citizens to live on less money for prescription drugs, for property tax rebates, for winter heat and year-around food.
What can Harrisburg do?
One big solution must come from Washington.
We need a federal law that says that if an item is taxable within a state, the merchant who sells that item must collect the sales tax and send it to that state.
These days, computers make that chore fairly easy.
The “don’t tax the Internet” crowd makes no sense. It isn’t the Internet that is being taxed. It is the screwdriver (or whatever) that is being taxed.
Taxes should be fair.
Right now, they aren’t, and one glaring inequity is the federal bias toward Internet sellers at the expense of the bricks-and-mortar sellers who provide local jobs, who pay local as well as state and federal taxes, who are available for instant purchases rather than waiting days or weeks for delivery from afar.
Congress should close that loophole this year.
— Denny Bonavita