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Holladay • The City Council unanimously approved a resolution in which members pledge to pay sales tax on their personal online purchases.

"Under normal circumstances it shouldn't be necessary to pass a resolution to urge city council members to obey the law," said Councilman Steve Gunn, who sponsored the resolution as a way to set an example and to highlight the problems local governments face by missing out on this revenue.

Utah law requires residents to pay taxes on internet purchases by declaring them on annual state income-tax returns. But few do and the requirement is virtually impossible to enforce.

Fewer than two in 100 taxpayers statewide report their online transactions, according to the Utah State Tax Commission. That amounted to $1.27 million in revenue last year, paid by some 16,599 households.

The state has estimated that it is missing out on some $200 million annually from sales tax on internet purchases — money that is owed to local as well as state government.

Amazon recently signed an agreement to begin collecting these taxes on sales to Utahns, but most online retailers don't charge such tax unless they have a physical presence in the state and are required to do so by federal law.

Holladay City Councilman Lynn Pace said he agreed with Gunn's proposal as a creative way to "generate awareness" about the issue.

It is critical for local governments to provide the services needed for residents, especially with a changing marketplace, he said.

Pace said he already pays sales tax on internet purchases, adding that it is a simple matter of doing the math and using the information found on credit-card statements.

Gunn said the next step to increase public awareness on this issue is to ask individual state legislators if they are paying their sales tax on online purchases. He said one lawmaker, Rep. Patrice Arent, D-Millcreek, was an inspiration for his resolution after she has paid these taxes for years.

Gunn plans to ask the Utah League of Cities and Towns this spring to take the pledge and ask its 246 member communities to do so as well. Sales tax and property tax are the two biggest sources of revenue for most cities.

In Holladay, sales taxes make up 27 percent of the total revenue stream, according to the city.

— Editor Dan Harrie contributed to this report.