FOR IMMEDIATE RELEASE: February 14, 2000
FOR IMMEDIATE RELEASE: February 14, 2000
WASHINGTON, D.C. The organizations that represent the leaders of the nation's state and local governments in a joint statement today called a draft proposal from e-commerce industry giants nothing more than a plan to allow large corporations to escape taxation.
The proposal, which originated from e-commerce industry representatives who serve on the federal Advisory Commission on Electronic Commerce (ACEC), would preempt state and local governments' ability to collect sales and use taxes on products and services that are already subject to these taxes. The proposed preemption would seriously affect the tax base in many states and local governments.
"This proposal sets in motion the end of the sales tax system which is the single most important source of revenue in the United States for schools and police and fire protection," said Illinois Senator Steven Rauschenberger. Rauschenberger is cochairman of the National Conference of State Legislatures (NCSL) Task Force on State and Local Taxation of Electronic Commerce.
Representatives of the seven major state and local public interest groups said the proposal flies in the face of principles that the commission agreed to in September including a commitment to respect state sovereignty issues. The proposal creates serious problems for state and local governments because it would:
"While this proposal purports to be a compromise, we believe it is fundamentally flawed," said Mayor Bob Knight of Wichita, Kansas, president of the National League of Cities (NLC). "We're more than ready to work with industry to find a solution. But we can't support a plan that gives the federal government control over state and local tax systems and drastically curtails our ability to raise the revenue we need to deliver public services."
"The proposal deeply involves the federal government in selecting winners and losers with regard to paying taxes in the e-commerce economy," said Commissioner C. Vernon Gray of Howard County, Maryland, president of the National Association of Counties (NACo). "At a time when state and local governments are striving for simplicity in their tax codes, it adds enormous new complexity. And most disappointing is the fact that it provides tax shelters to the wealthiest corporations on earth."
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