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PHILADELPHIA -- Pennsylvania could boost its budget more than $125 million a year by collecting sales taxes when residents go shopping online, say backers of a multistate effort to tax sales on the Internet the same as in stores.

Though Pennsylvanians are supposed to voluntarily report Internet and other out-of-state purchases and pay the state sales tax, the state Revenue Department collects only about $5 million a year in such voluntary payments.

Recouping the $125 million out-of-state sales tax loss that a department study estimated for this year wouldn't make a big difference in the more than $21 billion state budget, nor would it rival some other revenue-raising proposals.

It wouldn't equal the $800 million in state revenue that projections say legalized slot machines eventually could produce, for example.

But state Rep. David J. Steil, a Bucks County Republican, said in future years, "It begins to approach it, because remote sales transactions become more and more a part of the economy."

"As the popularity of Internet sales grows, the potential for losses also grows," said Stephanie Wyant, a state Revenue Department spokeswoman.

Steil is preparing legislation that would conform Pennsylvania sales tax rules with those in other states that hope to persuade Congress to let a moratorium on Internet sales taxes expire in November.

Pressure has been increasing, as states facing budget crunches due to the slow economy saw an estimated $13 billion in online sales taxes go uncollected last year, an amount that studies said could grow to $45 billion by 2006.

A group of 35 states and the District of Columbia began an effort last November called the Streamlined Sales Tax Project aimed at simplifying their tax rates -- and myriad rules on what is subject to the tax -- so companies involved in online commerce would be able to deal with them.

Pennsylvania participates as an observer, though not as a voting member of the project, said Steil, a member of a National Conference of State Legislatures task force that helped get the effort under way.

Steil introduced a bill that would have made Pennsylvania a full participant. The bill passed the state House but the Senate didn't act on it, he said.

If Congress lets the federal moratorium on Internet sales taxes expire, the state Legislature still would have to vote to require online retailers to collect the taxes.

Traditional retailers with stores in the state favor the effort, which would end the ability of Internet-only retailers such as Amazon.com to offer sales-tax free transactions.

But taxing Internet sales is opposed by some lawmakers who oppose any new tax, and by some who oppose taxes they fear may inhibit the growth of technology, Steil said.

Some major retailers began voluntarily charging online sales taxes last month, saying they hoped to bolster the effort to require their Internet-only rivals to do the same.

That probably won't make a big difference in revenue until Congress authorizes states to require the collections, Steil predicted.

"It's only a few companies that have agreed to do it," he said. "I don't know that we are going to spend much time trying to collect when it's only voluntary."

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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