New York City - Bloomberg: Online Retailers Should Collect Taxes

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New York City - Seeking millions in added tax revenues, the paterson administration this spring enacted a pair of provisions to assess business taxes against out-of-state banks that issue credit cards in New York and to force online retailers such as Amazon.com to collect state and local sales taxes on goods shipped to the state. Those changes could be undercut by a federal bill backed by Senator Schumer and Reps. Anthony Weiner and Gregory Meeks that would restrict the ability of states to collect taxes from companies with no "physical presence" in the state.

Weighing in on the issue yesterday, the mayor said it was a matter of fairness for a Web site such as Amazon.com to pay the same tax rate as a local bookstore.

"If you are going to have a tax system, one of the essences of it should be that it is fair," Mr. Bloomberg told reporters, responding to an article in yesterday's New York Sun. "And it just inherently makes no sense whatsoever to tax you if you want to buy a book from Amazon differently than if you want to buy a book from a bookstore. I'd feel the same way about the food vendor with the cart outside or the coffee vendors. They should be paying the same kind of sales taxes as somebody who rents a store and sells coffee from that store."

The mayor said it "probably wasn't the worst idea" for governments to extend a tax break to online retailers when the Internet was "in its infancy." Now that online shopping has more than caught up with traditional sales, the tax rates should be the same, he said.

Amazon.com is suing New York State over the new requirement, arguing it violates the Commerce Clause of the Constitution. Supporters of the federal bill say it was not intended to affect the New York sales tax law, but a tax expert told the Sun that the pending court case could bring the two measures into conflict.