Copyright 2000 The Seattle Times Company
The
Seattle Times
April 26, 2000, Wednesday Final Edition
Correction Appended
SECTION: EAST; Pg. B1
LENGTH: 481 words
HEADLINE: 2
cities endorse online taxes
Bellevue, Renton back mayors' action
BYLINE: Mike Lindblom; Seattle Times Eastside bureau
DATELINE: BELLEVUE / RENTON
BODY:
BELLEVUE / RENTON
Despite the region's thriving e-commerce economy,
officials in Renton and Bellevue have joined a national drive to impose
sales taxes on Internet retailers.
Monday, the two cities endorsed a resolution from the United
States Conference of Mayors against extending a moratorium on online sales tax.
Some local governments fear losing tax revenue as more people
shop online instead of in stores. Some elected officials want to make electronic
retailers collect sales tax every time a customer places an online order.
Online taxes were banned by the Internet Tax Freedom Act of
1998. Its sponsor, U.S. Sen. John McCain, R-Ariz., wanted to help a newborn
industry thrive. Congress is now considering whether to extend a moratorium on
the taxes - set to expire in 2001 - for four more years.
Under
the current system, online sales already are hurting tax-dependent cities,
officials say.
"It will destroy the capability of local
governments to raise revenues and provide citizens with basic services," said
Renton Mayor Jesse Tanner.
Bellevue estimates that if the
moratorium persists, the city would lose $2.3 million in 2004,
roughly the same as its losses from Initiative 695, the state's recent car-tab
tax cut.
The state Revenue Department figures it lost
$158 million this year because of untaxed
sales via mail, phone or Internet.
But for consumers, an online tax would boost
the cost of buying that next book from Amazon.com.
Traditional
retailers such as Wal-Mart, Target, J.C. Penney and Circuit City have allied
with the mayors' group, whose members also worry about equity for hometown
stores and mall owners.
Seattle, Newcastle and Sammamish city
councils haven't discussed the resolution, but officials said their cities ought
to reap online sales tax.
"The argument about it being
technology, and if we tax it we kill it, is totally bogus," said Mel McDonald,
Seattle's director of revenue, who notes that the cell-phone industry has
thrived while collecting various consumer taxes.
Inconsistent
state and local tax rates are one deterrent to taxing e-commerce. The U.S.
Supreme Court in 1967 ruled that catalog retailers shouldn't be burdened with
handling local sales tax, but the cities argue that new software makes the task
manageable by tracking buyers' ZIP codes. Meanwhile, states are promising to
simplify their tax rates.
The Washington Software Alliance
favors giving the e-commerce industry more "breathing room" until a solution is
found that won't give catalog companies and telemarketers an edge over online
sellers, said president Kathy Wilcox.
"No one's naive enough to
think we're going to get out from under the imposition of a tax regime," she
said.
Mike Lindblom's phone message number is 206-515-5631. His
e-mail address is mlindblom@seattletimes.com
.
CORRECTION:
ISHED CORRECTION DATE: 04/28/2000 -
Sen. John McCain, R-Ariz., sponsored an extension of the Internet Tax Freedom
Act of 1998, not the act itself. Recent U.S. Supreme Court rulings, not the act,
have limited states' taxing powers on interstate e-commerce. This article
misstated those facts.
GRAPHIC: (,)
LOAD-DATE: April 29, 2000 
