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Wyden backs online tax ban

The bill could benefit online retailers in Jackson County such as Musician's Friend

U.S. Sen. Ron Wyden of Oregon has backed legislation that would permanently ban new Internet commerce taxes and potentially benefit some online retailers in Jackson County.

This moratorium makes sure e-tailers have an equal shot at success in today's economy, and I believe they should be protected once and for all from unfair taxes that threaten their survival, said Wyden. It's time to make this ban permanent.

Wyden and other senators will promote legislation that would permanently extend a temporary moratorium created in 1998 on new or unfair Internet taxes.

The existing moratorium, which expires in November, affects taxes on Internet access, multiple-state taxation of a single item bought online, and discriminatory taxes that treat Internet purchases differently than other types of sales.

— Without the moratorium, 30,000 different jurisdictions around the country could levy discriminatory or multiple Internet taxes on e-commerce, said Wyden.

As an example of discriminatory taxes, he said that in one instance The Wall Street Journal's online version had been taxed while the newsstand version was not.

In the case of a company such as Harry and David, Wyden said some of the products could be subject to taxation in several states, creating an unfair tax structure.

Since Harry and David first backed the temporary legislation in 1998, a lot has changed in the way the company does business.

With a presence in many of the most populous states such as California, Texas and Florida, Bill Michel, Harry and David's senior vice president and general manager of direct marketing, said the company ends up paying taxes anyway.

For small (online) retailers it might be a burden, he said. But we collect and we remit (the taxes).

There are even services now that will send an electronic breakdown of taxes for individual municipalities that Harry and David can plug into its own online system, he said.

It's not as difficult as it once seemed, he said.

Michel, who said the company does a considerable share of online business, said most Internet commerce conducted by large companies is subject to state taxes because they might also have a retail presence in the state where an electronic sale takes place.

Still, Michel said it would be helpful if there was an attempt to streamline taxes to make it less confusing for retailers.

Eric Meadows, Internet director for Musician's Friend in Medford, said his company does 52 percent of its business online.

Many states, he said, have supported the idea of tapping into Web transactions, but without the taxes it helps businesses like his stay competitive in a world economy.

If people can't get it from the Internet at a good price, they just go to Canada or overseas, he said.

Musician's Friend, a subsidiary of Guitar Center, is one of the biggest online centers in Jackson County, Meadows said.

The company collects taxes from sales in states such as Kansas, Utah and Washington, where it also has a physical presence.

Reach reporter Damian Mann at 776-4476, or e-mail