Quite possibly. There are good reasons to be concerned about the threat to privacy from proposals to tax e-commerce, especially the proposal of the National Governors' Association.

This year, the state of Michigan, in an effort to collect "use" taxes, inserted a line (Line 30) in 1999 state income tax forms which specifically requests that citizens report their total online and interstate catalog purchases and pay the six-percent tax. It is highly unlikely that Michigan citizens will suddenly begin to tally the transactions they made last year via the Internet, catalogs, mail order, or 1-800 numbers and pay the tax, but the very insertion of Line 30 introduces a fundamentally new element in sales and use tax collection. It strips away the traditional anonymity of the taxation of personal purchases.

Heretofore, one of the positive features of a sales tax (or a use tax, for that matter) has been that it is a fairly anonymous tax. When you make a purchase in a store, you pay the tax to the vendor and then leave the store. No information is collected about the consumer and the state does not attempt to track individual purchases by citizens. That could all change now with the state's new emphasis on collecting so-called "use" taxes through Line 30 of state income tax forms. We may have even more to fear if Michigan adopts a "trusted third party" tax collection system as proposed by the National Governors' Association.

The NGA plan would effectively deputize third-party tax collectors to carry out the government's business of tax collection. Governor John Engler has been all too eager to volunteer Michigan citizens as guinea pigs to test out such a system. While privatization of many government functions is often a good idea, tax collection is probably one function of government that should not be privatized. Citizens are rightly concerned about private parties having access to their credit card numbers and personal buying habits without their express authorization.

While privatization of many government functions is often a good idea, tax collection is probably one function of government that should not be privatized.

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