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The state could be raking in an extra $25 million to $70 million ayear if it collected taxes from items sold over the Internet,officials say, a move that would take fewer changes here than inother states around the country.
If West Virginia starts taxing Internet sales, it might helpsupport sagging revenues.
As of December, West Virginia sales taxes are more than $11million below estimates. Sales tax revenue is the general revenuestream most below its expectations.
"We're very concerned with how the consumers sales tax is going,"said Administration Secretary Greg Burton. "People just aren't buyingas much as they used to."
The 6 percent sales tax is going down partially because people arebuying more services than goods these days, officials say, but alsobecause people who are purchasing items are turning to the Internetmore often.
"That's the one area of growth in the retail trade," said MarkMuchow, a tax analyst with the state Tax Department. "It's become abigger part of the pie. The effort here is to try to have a levelplaying field with businesses that are physically located in thestate."
One outspoken critic of the bill said the state should instead tryto attract businesses that operate online.
"We spend so much time worrying about how we're going to collecttaxes," Senate Minority Leader Vic Sprouse, R-Kanawha, said. "Let'sdevote that time to capitalizing on e-business instead of focusing onhow we can pound people with taxes."
Sprouse said that keeping Internet sales tax free could help WestVirginia land jobs if Internet retailers wanted to set up shop herewhile other states were taxing sales.
"I think ideologically it's the wrong thing to do," Sprouse said."The Internet tax is a mistake."
Supporters of the Internet tax say it's not fair for smallbusinesses in state to have slightly higher prices just becausethey're charging a tax already owed to the state.
The bill that would change West Virginia's system is being toutedas the Fairness to Main Street Act.
John Doyle, the bill's chief sponsor, said West Virginia is moreaffected by the loss than other states.
"A much higher percentage of businesses in West Virginia are mainstreet businesses," Doyle, D-Jefferson, said. "Each year, more andmore things are being purchased online. The sales tax will continueto drop precipitously."
West Virginia has already signed on to the Streamlined Sales andUse Tax Interstate Agreement, a pact between 35 states that will helpall states simplify tax codes to collect online sales tax. Members ofthe agreement spoke to lawmakers Tuesday at a presentation sponsoredby both the House and Senate finance committees.
This year, Doyle wants the state to be one of the first agreementstates to actually change its tax code. The first 10 states thatchange the laws get to act as board members for the rest, settingrules and determining changes that need to be made.
Doyle says West Virginia has a good shot at being one of the firstsince our sales tax is simpler than other states, which sometimeshave added local taxes or other issues to work out.
"West Virginia is going to have to make fewer changes than justabout any other state," Doyle said.
Some oppose the taxing change, however.
The Associated Press contributed to this report.
Writer Deanna Wrenn can be reached at 348-1796 or by e-mail email@example.com.