Does the Fuel Tax Uniformity Model Provide a Fix for Sales Tax?

Wilson, Robynn J.
July 2001
Journal of State Taxation;Summer2001, Vol. 20 Issue 1, p45
Academic Journal
Commentators have compared sales tax uniformity efforts to work done in the fuel tax area. There are parallels between fuel tax and sales tax administration problems. Both taxes have suffered from a lack of uniformity. Both taxes have suffered from a shrinking tax base. But there are a number of differences. Uniformity work in fuel tax has been in progress for over ten years. Serious sales tax uniformity efforts are comparatively recent, primarily driven by concerns over electronic commerce. The Federation of Tax Administrators (FTA) has led the work in fuel tax. Most of the work in sales tax has been accomplished by the Streamlined Sales Tax Project, a cooperative effort between states with help from industry. The project has the support of the FTA, the Multistate Tax Commission, the National Conference of State Legislators, and the National Governor's Association, although the project is not under the auspices of any of these groups. The goal of the project is to simplify sales/use tax administration for both the "Main Street" and remote sellers in the new e-commerce economy. The question is: Can sales tax efforts produce the results that the states have accomplished in fuel tax? Sales tax is a much bigger challenge for several reasons. Fuel tax affects one set of interdependent industries: fuel and transportation. Sales tax affects substantially all industries. Fifty-one jurisdictions impose fuel tax. Sales tax is imposed by thousands of jurisdictions, many of which overlap. Federal funding has facilitated work on the fuel tax problem. No such funding is available for sales tax. In addition, the most significant challenge of the sales/use tax area, nexus, has not been an issue in fuel taxation. Conversely, the sales tax problem enjoys certain advantages over fuel tax reform. States and localities impose sales tax at one point of taxation�at the retail level. States impose fuel tax at any of four points in the distribution chain. Secondly, the sales tax...


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