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E-Commerce Commission: When in Doubt, Do Nothing
12/17/99
The Advisory Commission on Electronic Commerce, divided over the status of Internet sales taxes, has decided to hold off formulating any recommendations until its next and final face-to-face meeting in Dallas in March.
The 19 members of the congressionally appointed commission spent two days this week in San Francisco sifting through proposals and position papers from hundreds of organizations. It had been expected that the commission might reach some consensus on web sales taxes during this meeting but in the end the commissioners remained deeply split by the issue. Chairman James Gilmore, governor of Virginia, strongly supports continuation of the current moratorium on new sales taxes on Internet commerce. His views are shared by other commission members, especially those representing technology companies.
On the other side of the issue is commissioner Michael Leavitt, governor of Utah and chairman of the National Governors Association. Leavitt, along with many other governors and city mayors, is concerned that state and local governments will lose tax revenue as more consumers buy online rather than in stores. NGA has proposed a voluntary system, administered by a third party, for collecting and distributing sales taxes on Internet purchases.
Anti-tax groups pointed out that so far e-commerce has not cut into state and local sales tax collections. In fact, they note that in most states sales tax revenues are up significantly. NGA countered that the increase is due to an unusually robust economy, which may return to more normal levels over the next few years.
Many state and local leaders, along with traditional retailers, also feel the current sales tax system hands online merchants an unfair competitive edge over store merchants. The e-Fairness Coalition, a retail-based organization that formed last month, told the commission it was only seeking a "level playing field" with online sellers.
E-Fairness Coalition members include International Council of Shopping Centers, Alabama Retail Association, American Booksellers Association, Ames Department Stores, Illinois Retail Merchants Association, International Mass Retail Association, Lowe's Companies, Michigan Retailers Association, National Association of Real Estate Investment Trusts, National Association of Realtors, North America Retail Dealers Association, Retail Merchants of New Hampshire, Tandy/RadioShack, Real Estate Roundtable, Wal-Mart, Westfield America Inc., Atlantic Independent Booksellers Association, Great Lakes Booksellers Association, Home Depot. Mid-South Booksellers Association, Missouri Retailers Association, Mountains & Plains Booksellers Association, National Community Pharmacists Association, New England Booksellers Association, Northern California Independent Booksellers, Pacific Northwest Booksellers Association, Retailers Association of Massachusetts, Rouse Co., ShopKo Stores, Simon Property Group, Southeast Booksellers Association, Southern California Booksellers Association, South Carolina Merchants Association, Virginia Retail Merchants Association, and Weingarten Realty Investors.
The commission must make its report to Congress in April. However, any recommendations must receive the support of at least two-thirds of the commission's members.
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