fedgazette

Taxing definitions

Wisconsin State Roundup

Published May 1, 2005  |  May 2005 issue

The governor's budget proposal includes a redefinition of what constitutes a taxable good, which could increase state revenues.

The revision would cost Wisconsinites an extra $23.1 million a year through sales taxes on items that are currently untaxed. The proposal would also place Wisconsin with 18 other states in a multistate effort to harmonize tax codes to facilitate trade.

Among other things, it would change the way food is taxed. Some prepared items, such as chocolate chips and bottled tea, would be taxable; those items are expected to bring in $2.13 million and $5.4 million, respectively. Some other currently taxed food items, such as popcorn and ice, would be exempted, resulting in losses of $2.4 million and $1.78 million.

The plan would also change the way out-of-state sellers charge sales tax. By federal law, the state can't force merchants not physically located in the state, such as Internet retailers, to charge sales tax. However, the state allows such retailers to keep 0.5 percent of their sales tax take if they voluntarily collect the tax. The new law would increase the compensation for collecting sales tax.

Joe Mahon

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