Gold investors have been reading reports for several months now about India’s attempt to crack down on the buying of gold.
The citizens of that country buy so much gold that it is placing a serious strain on the government’s balance of payments.
Hence the government response.
Something like that can’t happen here, can it?
It might. But this would not be the result of some secret conspiracy. It could be something very obviously right in front of our noses.
The Industry Council for Tangible Assets has been spreading the word that it is more and more likely that federal law will change to empower states to collect their sales taxes across state lines whether transactions are conducted by Internet or mail.
For many years, these efforts have been stopped by a Supreme Court ruling.
That doesn’t mean the law cannot change.
ICTA’s lobbyist Jimmy Hayes, a former congressman, indicates this is more and more likely.
What happens to gold bullion sales nationally when these are subjected to sales taxes?
Usually when the cost of something goes up through taxes, the activity diminishes or goes underground.
Residents of some states are very fortunate in that they have exemptions. At first blush it would seem that a new law enabling states to collect sales taxes across state lines that passes Constitutional muster with the Supreme Court should have no impact on them. But is that really the end of the story?
If these states are as revenue hungry as most are, once they hear how easy it might become to collect the tax, could those exemptions get repealed?
The worry is the answer is yes. That’s why ICTA is spreading the word. That’s why it is important for every gold investor to be watchful.
Adding the sales tax where none was owed before certainly will not help the value of gold bullion and could very well hurt it.
Buzz blogger Dave Harper is editor of the weekly newspaper “Numismatic News.”