Washington, D.C. Mayor Anthony A. Williams Appointed Chair of New Task Force on Electronic Commerce and Internet Technology

By Larry Jones

Conference president and Denver Mayor Wellington Webb recently appointed District of Columbia Mayor Anthony A. Williams, chair of a new Task Force on Electronic Commerce and Internet Technology. The primary purpose of the task force is to assist the Conference leadership in developing policy and legislative strategy to help cities win approval of legislation that will enable them to collect sales taxes on electronic commerce. The Task Force will also examine how technology can be used to improve the efficiency of the local workforce and the delivery of public services. Further, it will focus on bridging the gap between the digital divide.

Under Supreme Court decisions handed down in 1967 and 1992, state and local governments can not impose a duty on companies located outside of their boundaries to collect their sales taxes. Consequently, merchants using electronic commerce to sell goods and services are not required to collect sales taxes when they are not physically located in the customer's state. This problem, referred to as "remote sales, " is seriously undermining state and local sales tax systems and subjecting Main Street merchants to an unfair competitive disadvantage. State and local governments could lose an estimated $11 billion in annual revenues by 2004 if this problem is not corrected.

Mayor Webb is expected to complete appointments to the Task Force within the next few weeks so that Mayor Williams can meet with the members and develop a work plan soon. The Task Force will provide support to Dallas Mayor Ron Kirk, who serves on the Advisory Commission on Electronic Commerce. This Commission was created by Congress last year to examine the impact of sales taxes on electronic commerce and to make recommendations as to whether or not sale taxes should be collected on remote sales conducted over the Internet, telephone, or mail-orders. The Commission is interested in finding out if state and local sales tax systems, with different tax rates, tax bases, and administrative requirements, can be simplified so that they can be easily applied the electronic commerce.

State and local officials have been invited to submit plans to the Commission showing how their sales taxes can be simplified and made less burdensome for merchants using electronic commerce. From the plans submitted, the Commission will select a few plans to be presented at its next meeting, which is scheduled for December 14 and 15 in San Francisco. The new Conference Task Force may be instrumental in helping state and local officials prepare plans to submit to the Commission.