Americans get on-line tax break

As a fellow Canadian living in Windsor, Ont., and commuting to work each day to Detroit, Mich., I would like to point out a major factor missing from a front page article published in ComputerWorld Canada, Jan, 12, 2001, “We’re surfing, just not buying.”

Chris Conrath, the writer of the piece, makes some great points as to why Canadians are not purchasing on-line as much as our neighbours to the south. Yes, I agree Canadian retailers haven’t put forth the effort to push on-line retail, but he missed a key issue that is a huge political debate in the U.S. – state taxes on on-line purchases.

In Canada, you can’t avoid paying the PST or GST on on-line purchases, period. Generally, in the states you can “avoid ” paying state sales tax if you purchase from another state. If a company is selling from California and your mailing address is in Michigan, you don’t need to pay sales tax (although you are required to claim it on you income taxes, but no state is tracking cross-state Internet purchases anyways).

Even if a product cost exactly the same amount after currency exchange, if you can save the sales tax, it adds up, especially on big-ticket purchases. As for purchasing from the U.S. and shipping to Canada, I would never do it. The final cost after shipping and handling, duty, GST and PST (and why should I pay PST on imported items is beyond me) makes the item way more expensive than a local purchase. Why should I bother to wait between three and five days for an item when I could go to a local store to purchase it. There must be some sort of bottom-dollar cost saving to the customer, otherwise Canadians will never fully embrace on-line purchases in Canada.

Let me ask you this: would you like to save 15 per cent (PST and GST) if you could? I sure would. Zero per cent tax on Internet purchases in the U.S. That’s why on-line purchases are growing at a rabbit’s pace in the U.S. and at a turtle’s pace in Canada.

Paul Lawhead

Windsor, Ont.