AP Wire Service

Michigan will join other states in developing a way to collect sales taxes on Internet and catalog purchases under a bill signed Monday by Gov. John Engler.

The bill, passed last week by the state Legislature, allows Michigan to work with the 19 other states that already are part of the Streamlined Sales Tax Project.

People already are required to pay sales taxes on Internet, catalog and telephone purchases, but the law is widely ignored. The Senate Fiscal Agency estimates that Michigan is missing out on $100 million to $300 million in sales and use tax revenues it should be getting each year.

Engler said the new law will help protect funding for schools. About three-fourths of Michigan's sales tax revenue is distributed to K-12 schools. The rest goes to local governments.

Critics called the law a tax increase and warned that its passage would discourage Internet sales in Michigan.

The bill would:

· allow the state to enter into a multistate sales and use tax agreement.

· create a board of governors that could represent Michigan in meetings with other states that are part of the agreement.

· provide for the registration of Internet and catalog sellers, who would have to select a method for the collection and remittance of sales and use taxes.

· provide for the use of an automated system that would calculate each jurisdiction's tax on a transaction.