I'm on AOL and CPU was not mentioned in BW there
the cover story "Internet Anxiety" discusses the
trails and tribulations of several companies
Internet exposure, so buried in the issue may
be mentions of CPU, but not that I can see from
the limited content from BW that AOL offers.
Most of the article discusses Charles Schwab
Here's something for our cross State Sales Tax Debates:
(seems like CPU will get in the rear once again here)
BUSINESS WEEK ONLINE
June 17, 1999
An End Run Around the Internet Tax Moratorium?
A coalition of state and local government groups will try to hammer out its own Net tax plan
Who needs an Internet Tax Commission to tax sales on the Net? Not governors, legislators, or local officials. Business Week has learned that a coalition of seven state and local government groups -- including the National Governors' Assn. and the U.S. Conference of Mayors -- will try to do an end run around the congressionally mandated commission due to meet for the first time on June 21-22 in Williamsburg, Va. They hope to come up with a uniform sales tax system on their own.
If the gambit succeeds, it could pave the way for state and local governments to collect billions of dollars in new taxes on both electronic commerce and mail-order sales. In 1998, conventional sales taxes generated $150 billion, or 36% of all state and local tax revenues.
Just as important, the move could fundamentally alter the relationship between states and their local taxing jurisdictions. "This is probably the reshaping of local and state government for the 21st century," says Utah Governor Michael O. Leavitt.
ANTITAX ADVOCATES. Most state and local officials are convinced that the Federal Advisory Commission on Electronic Commerce won't endorse any plan to tax remote sales on the Net or through the mails. At least 11 of the panel's 19 members either represent industries that would be subject to the taxes, or are critics of such levies. The commission's consumer representative, Grover G. Norquist, heads an antitax advocacy group and has served as a registered lobbyist for Microsoft. Norquist wants the panel to recommend abolishing all state sales taxes, rather than expanding them to include the Web. "We need to step back and rethink this at a broader level," he says.
In addition, the commission's probable chairman, Virginia Governor James S. Gilmore III, has been an outspoken critic of Internet taxes. The panel has until April, 2000, to design a tax plan for the Net and other remote sales. Mark Nebergall, vice-president of the Software & Information Industry Assn., rates the odds of consensus at "slim, none, and fat."
So state and local officials will try to find their own way to tax E-business, without unfairly burdening E-biz retailers. "A radically simplified system is clearly in the interest of electronic commerce,' says Leavitt, "A solution has to be put on the table."
Besides the governors and mayors, the coalition includes the National League of Cities, the National Conference of State Legislatures, the International City/Council Management Assn., and the Council of State Governments.
UNDUE BURDEN. Backers hope to satisfy both Congress and the Supreme Court, which has barred states from requiring Web merchants and mail-order houses to collect sales taxes. The court ruled as recently as 1992 that tracking thousands of different levies imposed by cities, states, counties, and special taxing districts amounts to an undue commercial burden on business.
But supporters believe that an aggressive effort to reduce complexity, combined with new technology that makes it easier for business to calculate taxes, could clear the way for the court to reverse itself. Says Frank Shafroth, chief lobbyist of the National Governors' Assn.: "If we eliminate the burdens, we could satisfy the court."
By September, staffers for the seven organizations hope to draft model legislation that would simplify the system of sales and use taxes, and ease audit and filing burdens on businesses. Under the plan, states would be free to set their own tax rates. But a product or service would be taxed at the same level whether purchased on the Web, through the mail, or at a Main Street business. The locus of a remote tax would be the buyer's mailing address. The key issue: Will each state adopt a single rate, or will local jurisdictions be allowed to continue to set their own sales levies?
MAJOR BATTLES. Backers hope the model bill could be enacted buy up to 10 states before a congressional freeze on new Net taxes expires in 2001. That would give the initiative some momentum, they believe.
Supporters concede that pulling this off will be an uphill battle. Efforts to adopt the uniform law could set off major battles in state legislatures across the country. Some business are sure to fight the proposal, and so will local governments if they feel their right to tax is being curbed.
But state and local governments aren't going to get any help from the troubled Internet Tax Commission. And without some major changes in the current sales tax regime, the existing congressional moratorium could be extended and continued indefinitely.
By Howard Gleckman in Washington
EDITED BY DOUGLAS HARBRECHT
Copyright 1999 The McGraw-Hill Companies All rights reserved. Any use is subject to (1) terms and conditions of this service and (2) rules stated under ''Read This First'' in the ''About Business Week'' area.
06/17/99 14:08 |
