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Daily Planet Staff 

Sales tax and the Internet – it’s an issue that needs to be addressed immediately, according to one local independent bookseller who spoke at a Chamber of Commerce meeting Thursday. 

Bill Petrocelli, co-owner of Book Passage, a “ma and pa” bookstore in Corte Madera, said the giant booksellers are “trying to kill us with the sales tax issue.” 

Customers at Main Street bookstores here must pay California sales tax, but Amazon.com customers in California do not pay sales tax on their purchases from the mega-merchant. 

The state determines if the business has sufficient connection or nexus in the state to pay sales tax here, and states have no jurisdiction over out-of-state sellers. 

But Petrocelli believes the online Amazons, Barnes and Nobles and Borders do have such a connection. 

“I think they’re obligated (to pay sales tax) under the present law,” said Petrocelli. 

The bookseller would exempt small online businesses that lack the resources to economically add sales tax to customer bills. 

Berkeley bookstore owner Andy Ross, who operates two Cody’s bookstores in town, has been a vocal critic of the e-commerce advantage in gaining customers who don’t want to pay sales tax. 

He had said in an earlier civic meeting that sales tax feeds communities and that it pays for one-quarter of Berkeley’s services, including police, parks, fire and road repair. 

Speaking from an opposite viewpoint, an information economics expert told Chamber business leaders that time is available to work on solutions to level the playing field. 

Hal R. Varian, dean of the School of Information Management and Systems at UC Berkeley, said later that an ideal world scenario would offer a “dramatically different sales tax. 

“You would either have an income tax surcharge or a value added tax,” he said. 

In presenting an option to retain the sales tax until a better solution is determined, Varian reminded the audience that online purchases within the state are taxed. 

Additionally, he said airline tickets are the largest online purchases and those sales “completely swamp the sales of books and CD’s.” 

He also said that mail order companies out of state don’t pay tax either, and they have about 6 percent of total retail sales, compared to the one-half percent of those sales through e-commerce. 

He talked about the complexity and inefficient implementation of sales taxes. 

There are 7,500 taxing jurisdictions, and while federal uniformity has been suggested it would be difficult to implement. Varian said Congress would decide, but the states would spend the money. 

As did Petrocelli, Ross viewed Varian’s viewpoint of the problem as a recipe for inaction. 

To scrap sales tax and increase income tax is a fine proposal, said Ross, but not politically feasible. Like Varian he said the political reality makes the penny raises of sales taxes more palatable to the voters than income tax. 

In the meantime, said Ross, the sales tax should become more fair by eliminating its exclusion on Internet commerce. 

“The same products sold to the same consumer in the same locality should be taxed the same way,” he said