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WHEREAS, the use of new communications technologies, including the Internet, as a way to conduct sales of goods and services is accelerating, and
WHEREAS, out-of-state vendors who conduct sales via the Internet, mail order and phone, under many circumstances, are not required by law to collect existing sales and use taxes imposed by the states and local governments in which the purchaser resides, and
WHEREAS, current laws create a competitive disadvantage and great inequities between merchants who sell from brick and mortar establishments and those who sell from electronic stores, and
WHEREAS, this migration of sales and the resulting erosion of sales and use tax revenues is restricting the ability of state and local governments and school districts to collect taxes which finance essential public services including but not limited to police, fire, emergency medical service, and education, and
WHEREAS, out-of-state sales have an adverse impact on local infrastructure and on the continued survival of retail businesses in our cities, towns, and villages and
WHEREAS, municipal governments have long expressed concern about the loss of municipal revenue due to out-of-state sales (originally via mail order), and
WHEREAS, these out-of-state vendors freely make a voluntary business decision to conduct their businesses electronically or from remote locations, and
WHEREAS, out-of-state vendors utilize some of the most advanced technology available to conduct their businesses, which equips them better than many Main Street merchants to collect sales and use taxes, and
WHEREAS, 99 percent of the goods and services purchased over the Internet are bought using credit cards and other electronic payment mechanisms which offers opportunities to collect existing taxes in non-discriminatory and efficient ways, and
WHEREAS, there are vendors which offer sales and use tax compliance systems to companies who are obligated to collect sales and use taxes, and more would enter the field, if federal law required vendors to collect taxes due from their customers, and
WHEREAS, the primary barrier to creating a non-discriminatory collection requirement is the Supreme Court's judgement that only Congress should determine that a collection requirement would not unduly burden interstate commerce, and
WHEREAS, NLC, in partnership with the other six national organizations representing state and local governments, has adopted a joint statement of principles for making electronic commerce fair which calls for:
1. equal treatment of all sales transactions whether that transaction is done in person, on the telephone, by mail, or on the Internet,
2. a federal law authorizing state and local governments to require out-of-state vendors to collect and remit sales and use taxes,
3. protection from federal preemption of state and local authority to determine their own tax policies,
4. cooperative efforts to simplify state and local sales and use tax systems
and the compliance burdens those systems place on out-of-state vendors,
and
WHEREAS, the federal government has created the Advisory Commission on Electronic Commerce to examine these issues, and
WHEREAS, the seven state and local public interest groups are committed to working together to develop fair and equitable sales and use tax collection strategies.
NOW, THEREFORE, BE IT RESOLVED, that the National League of Cities urges
the Advisory Commission on Electronic Commerce to recommend that Congress enact and the President sign legislation authorizing state and local governments to require the collection of legally due sales and use taxes on goods and services sold into the state, remit remittance of those taxes to the purchasers' state, and to require states to distribute tax revenues to cities and towns pursuant to precedent and applicable state law; and
BE IT FURTHER RESOLVED, that the National League of Cities opposes any federal legislation which would preempt state and local authority to collect legally due sales and use tax on goods and services sold into the state; and
BE IT FURTHER RESOLVED that the National League of Cities supports joint efforts by the state and local public interest groups to develop fair and equitable sales and use tax collection strategies.
* The six public interest groups who joined NLC in adopting the statement are the National Association of Counties (NACO), U.S. Conference of Mayors (USCM), International City/County Management Association (ICMA), National Conference of State Legislatures (NCSL), National Governors' Association (NGA), and Council of State Governments (CSG). In addition, the American Association of School Administrators, National School Boards Association, and American Booksellers Association endorsed the Statement.