Copyright 1999 The San Diego Union-Tribune
The San
Diego Union-Tribune
December 2, 1999, Thursday
SECTION: BUSINESS Pg. C-1
LENGTH: 716 words
HEADLINE:
Internet sales tax question divisive; Golding speaks out
against tariff at Web policies forum
SOURCE: STAFF
WRITER
BYLINE: Dean Calbreath
DATELINE: SEATTLE
BODY:
SEATTLE -- It was not as gripping as police and protesters clashing
in the streets over the ongoing meeting of the World Trade Organization.
But e-commerce negotiations might have broader implications for U.S.
businesses and consumers, who are doing an increasing amount of business over
the Internet, as well as retailers who are finding stiff competition from Web-
based sales.
In a key address to the WTO's ministerial conference,
President Clinton last night called for the extension of a three-year moratorium
on trade barriers against e-commerce -- a catchword for business conducted over
the World Wide Web. Observers say Clinton likely will get his wish.
But
in a meeting on Internet policies chaired by the U.S. Commerce Department, a
number of municipal officials said Internet sales should be taxed the same as
traditional retail sales.
San Diego Mayor Susan Golding was one of the
few who spoke out against taxation, saying she feared taxes would stymie the
growth of Internet business.
"I don't think we should create any new
taxes until we know how all of this shift to the Internet is going to settle
out," Golding said. "I think we ought to give it a little more time to see where
it ends up." For cash- strapped municipalities, the Internet is an increasingly
lucrative target for revenues.
Business-to-business trade over the
Internet has jumped from zero to $43 billion in the last 10 years, according to
figures cited by Commerce Department officials. Retail trade totals more than $8
billion. By 2003, it is estimated that e-commerce will total $1.3 trillion.
To many government officials, that growth in trade is too large to
ignore.
King County, Wash., Supervisor Jane Hague argued that e-commerce
taxation would provide money needed to improve education and infrastructure.
Hague said taxation also would help level the playing field with
so-called " bricks-and-mortar" retailers, who are now at a disadvantage to
Web-based sellers because they pay taxes.
Randy Johnson, who chairs the
Hennepin County Board of Commissioners in Minnesota, said Internet providers are
hypocritical if they expect government to police privacy and intellectual
property rights but oppose government taxes.
"The Internet wants a
discriminatory advantage (against traditional retailers)," Johnson said. "They
even advertise, 'Buy here. There's no sales tax.' But the
Internet is really an inefficient way of delivering services,
with all the charges for shipping and handling."
Johnson, whose district
encompasses the nation's largest indoor shopping center, Mall of America, feared
the Internet's effects on retailers who pay taxes.
"If foot traffic in a
mall drops 15 percent, the mall becomes unprofitable," he said.
In
response, Golding said efforts to tax the Internet might kill the goose that
laid the golden egg.
"All of these changes in technology are taking
place at such a breathtaking pace that we stand to lose more than we would gain
if we slow the pace down by creating new taxes," Golding said.
"We're
focusing on the Internet as a potential revenue source, but we're putting very
little focus on the high-income jobs that are being produced and the high-priced
homes that are being bought by the people with those jobs."
Johnson,
said he doubted that taxes would slow Web-based
sales.
"The growth of sales on the
Internet is the fastest growth of any type of commerce in human
history," he said.
In addition, most of the wage growth from e-commerce
sales is centered in a handful of urban centers where Internet companies are
based, Johnson said.
On the sidelines of the verbal sparring match were
such companies as America Online and the Adobe software company, as well as the
Business Software Alliance, which projected that e-commerce sales of software
will rise from $3.5 billion this year to nearly $33 billion by 2003.
For
the most part, Internet businesses were not too concerned that governments were
considering taxes on their trade.
"The taxes wouldn't affect us," said
George Vradenburg III, a global strategic adviser for AOL. "We're neither a
buyer or seller of goods. We would, however, be a collector of taxes, so our
chief concern is that whatever is done should be fair, simple and low-cost."
LOAD-DATE: December 3, 1999
