National Governors' Association
Council of State Governments
Council of Chief State School Officers
e-Fairness Coalition
International Council of Shopping Centers
The International Mass Retail Association
National Retail Federation
Real Estate Roundtable

June 27, 2000

The Honorable John McCain
Chairman
Senate Commerce Committee
Washington, D.C. 20510

Dear Mr. Chairman:

We are writing to urge your support for S. 2775, the Dorgan-Voinovich e-commerce legislation, introduced with their nine other co-sponsors. This legislation accomplishes two critical goals: it creates a level playing field, and it extends the Internet Tax Freedom Act for four years in order to provide time for states to simplify and streamline the nation's state and local sales tax systems. Our support for any moratorium extension is contingent upon simultaneously enacting legislation that creates a level playing field.

All of us recognize that the Internet has contributed to some of the most far-reaching changes and transformations of the global economy by introducing a level of unprecedented efficiency and competition into the marketplace. That makes it more important than ever to avoid government imposed discrimination against traditional retailers. This legislation is especially important to ensure that:

• Retail stores (especially in rural areas) can compete with remote sellers, both across the counter and on the Internet; 
• All retailers, large and small, bricks-and-mortar and remote sellers, are subject to equal tax collection requirements; 
• Consumers who pay sales taxes in stores no longer have to subsidize internet customers who don't pay sales taxes; 
• State and local tax bases are broader and fairer. 
• State and local governments, for sales and excise tax purposes, have equity with the federal government, which currently collects taxes on airline tickets sold over the Internet; and 
• The single most important source of revenues for services, such as public education, is protected, and further that state sovereignty is preserved.

As Intel CEO Andrew Grove and Hewlett-Packard CEO Carly Fiorina testified before Congress this month, we must eliminate any special tax advantages, and allow states to work together to simplify their current sales tax systems. This approach would keep tax policy neutral so that neither traditional retailers nor remote sellers (catalog, Internet, or similar enterprises) are given an advantage based on tax policy.

State and local governments are already moving forward aggressively to develop a radically simpler, streamlined sales tax system that states can adopt. Over thirty states have already met four times this year and have meetings scheduled each month this summer, working in tandem with the private sector and local governments, to develop model state legislation. That model legislation will be ready well before the current moratorium expires. The Dorgan-Voinovich legislation would provide important incentives for this critical effort and enable the Senate to address this issue once and for all by enacting a compact.

The Senate now has an opportunity to enhance competition and to make sure that every retailer in America can compete fairly. The nation's state and local elected officials, every major organization representing the nation's retailers, and many organizations representing elementary, secondary, and post secondary education all strongly support achieving a balanced, state-based approach with a level playing field.

Sincerely,

Signatures on file.