Online sales tax battle looms in US

Amazon and Ebay, two of the biggest names in online retail, have staked out contrary positions in a debate over the taxation of US Internet shopping, which enables many buyers to escape paying sales tax. The two companies are divided in the face of a lobbying challenge from bricks-and-mortar rivals including Walmart and Sears, which complain that a tax loophole gives their online rivals an unfair price advantage. The issue is being pushed up the political agenda by the weak public finances of many US states, which are struggling with budget deficits and are eager to find new sources of tax revenue. The US does not have a federal tax law on Internet commerce, but since 2008 seven states have changed their laws in an effort to make Amazon and others collect sales tax from customers. Amazon has fought such moves aggressively, but says it would support a federal law provided it was simple and applied even-handedly. Ebay, by contrast, remains a staunch opponent of any catch-all legislation. The controversy has implications for cash-strapped consumers, whose shift to tax-free online shopping was accelerated by the economic downturn.