|
AGENDA #4d MEMORANDUM TO: Town Council FROM: Mayor Rosemary Waldorf
SUBJECT: Resolution Supporting Sales Taxes on Remote Sales and Opposing U.S. Senate Bill 2255 DATE: June 12, 2000 BACKGROUND AND DISCUSSION Out-of-state remote vendors who conduct sales on the Internet, mail order, and telephone are not required by law to collect existing sales and use taxes imposed by State and local governments. There is currently an Internet tax moratorium in effect until October 2001. U.S. Senate Bill 2255 proposes extending the Internet tax moratorium for five more years beyond October 2001. The U.S. House is expected to consider similar legislation. I believe that if the Internet tax moratorium were extended, it would seriously jeopardize the ability of State and local governments to ever collect revenues from electronic commerce. The International City/County Management Association, along with the National League of Cities and the National Association of Counties, is working with a bipartisan group of senators to amend the bill to authorize states to require collection of remote sales and use taxes if the states simplify their sales tax systems. We believe that the legislation developed from this collaboration would simplify tax bases and streamline the collection of sales taxes on remote commerce. Increasing sales on the Internet and the subsequent erosion of sales and use tax revenues would limit the ability of local governments to finance essential public services. Erosion of sales tax revenues would reduce the State’s ability to fund some local programs. On April 12, 1999, the Council approved a resolution supporting fair treatment of local retailers and local and state governments in the regulation of electronic commerce (see Attachment 1). The National League of Cities’ Board adopted electronic commerce as its top federal priority for 1999 and has since pushed to ensure equity in future growth of electronic commerce. I believe that adoption of the attached resolution is consistent with the Council’s actions in 1999, reflecting concerns about the impact of electronic commerce on tax revenues.
RECOMMENDATION That the Council adopt the attached resolution, supporting sales taxes on remote sales and opposing U.S. Senate Bill 2255. ATTACHMENTS 1. April 12, 1999 Resolution Supporting Fair Treatment of Local Retailers and Local and State Governments in the Regulation of Electronic Commerce.
A RESOLUTION SUPPORTING SALES TAXES ON REMOTE SALES AND OPPOSING UNITED STATES SENATE BILL 2255 (2000-06-12/R-5) WHEREAS, out-of-state remote sellers who conduct sales via the Internet, mail order, and telephone are not required by law to collect existing sales and use taxes imposed by state and local governments; and WHEREAS, state and local governments are working together to implement a streamlined sales tax system that would simplify definitions, tax rates, and tax bases and use 21st Century technology in the collection process; and WHEREAS, current laws create a competitive disadvantage and great inequities between merchants who sell from traditional “brick-and-mortar” establishments and those who sell from electronic stores; and WHEREAS, increasing sales on the Internet and the resulting erosion of sales and use tax revenues will limit the ability of local governments to finance essential public services such as police, fire, emergency medical service, education, social service, infrastructure development, and healthcare; and WHEREAS, a recent study estimates that state sales tax revenue losses in 2003 will exceed $10 billion; NOW, THEREFORE, BE IT RESOLVED that the Chapel Hill Town Council supports simplification of state and local sales taxes, and urges states to move expeditiously to develop and approve model simplification legislation. BE IT FURTHER RESOLVED THAT the Council opposes efforts, as proposed in Senate Bill 2255, to extend or expand the current Internet tax moratorium beyond its expiration in October 2001. BE IT FURTHER RESOLVED THAT if state and local governments choose to negotiate a brief extension of the existing moratorium as part of a broader bill, such an extension: · Should only be effective for a short period of time (no more than two years); and · Must be linked to states’ successfully implementing sales tax simplification, which would trigger Congressional authorization of expanded duty to collect use taxes on remote sales. This the 12th day of June, 2000.
ATTACHMENT 1 A RESOLUTION SUPPORTING FAIR TREATMENT OF LOCAL RETAILERS AND LOCAL AND STATE GOVERNMENTS IN THE REGULATION OF ELECTRONIC COMMERCE (99-4-12/R-11) WHEREAS, the National League of Cities (NLC) has listed Electronic Commerce as its top federal priority for 1999 and seeks federal action to establish fair treatment for local retailers and cities on electronic commerce; and, WHEREAS, the National Association of Counties (NACO), and U.S. Conference of Mayors have filed a federal lawsuit to block the Advisory Commission on Electronic Commerce from meeting, arguing that it does not comply with the representation requirements of the 1998 Federal Internet Tax Freedom Act, its enabling legislation, because it does not include sufficient state and local government representation; and, WHEREAS, the Town of Chapel Hill finds that these efforts by national organizations are being taken in the best interests of local governments and local businesses; and NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby indicates its support for the policies of the NLC, NACO, and U.S. Conference of Mayors on the subject of electronic commerce and urges its representatives in Congress to support balanced representation on the Internet tax commission and federal legislation that will establish fair treatment for local governments and local businesses on electronic commerce. BE IT FURTHER RESOLVED that the Mayor is requested to write to the Town’s representatives in the United States Senate and House of Representatives conveying the Town’s position on this issue. This the 12th day of April, 1999. |