A story worth keeping an eye on overtime
March 12, 1999 WSJ
Lawmaker Predicts Internet Sales
Will Be Subject to Local Taxation
By BRYAN GRULEY
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- A key lawmaker predicted Friday that Internet sales
ultimately will be subject to state and local taxation.
Rep. Billy Tauzin (R., La.), chairman of the House Commerce
Committee's Telecommunications Subcommittee, told an investor
conference here that "Congress is going to respect the right of state and
local governments to tax e-commerce."
Mr. Tauzin's remarks constitute the clearest indication to date from a key
member of Congress that the state and local arguments are being heard on
Capitol Hill.
"What we will be able to do is define some sort of rational way to allocate"
the distribution of taxes, the congressman said.
"To put it another way," Mr. Tauzin added, "I think e-commerce is going
to have to share revenues with local jurisdictions similar to ... [what]
brick-and-mortar commerce shares."
Internet taxation has been a simmering issue for some time, but the debate
has moved to the front burner since Congress's imposition last year of a
three-year moratorium on any new such taxes while a newly created
commission studies the issue.
State and local officials are concerned about a sharp decrease in sales-tax
revenue if legislation isn't enacted requiring the collection of sales taxes on
online transactions, as well as other remote sales. The National Governors'
Association said in December that states could lose as much as $20 billion
a year in lost sales taxes as Americans take advantage of tax-free shopping
over the Internet. Sales taxes provide nearly half the money for state and
local budgets.
Based on projections that online sales could reach $300 billion by 2002,
states could lose $15 billion to $20 billion a year in sales taxes they would
have otherwise collected, the governors' association estimated.
The officials haven't seen the commission as part of any solution, claiming
that it's stacked with Internet and technology executives and that anything it
might produce would be a sham.
In fact, the National Association of Counties and U.S. Conference of
Mayors filed a lawsuit on those grounds earlier this month seeking to block
the commission from meeting. |
