Magazine article Nation's Cities Weekly

NLC Calls Industry E-Tax Compromise `Fundamentally Flawed'

Magazine article Nation's Cities Weekly

NLC Calls Industry E-Tax Compromise `Fundamentally Flawed'

Article excerpt

A proposal developed by the e-commerce industry representatives that they say is designed to help the Advisory Commission on Electronic Commerce reach a compromise has drawn flak from the seven public interest groups representing state and local government. NLC last week joined with the public interest groups in calling the proposal "nothing more than a plan to allow large corporations to escape taxation."

"While this proposal purports to be a compromise, we believe it is fundamentally flawed," said Mayor Bob Knight of Wichita, Kan., president of the National League of Cities (N-LC). "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 Advisory Commission on Electronic Commerce, which was established in the Internet Tax Freedom Act, is scheduled to hold its final meeting on March 20-21 in Dallas, Tex.. The hoped for outcome of that meeting is a unified report making recommendations to Congress on how to apply existing tax structures to the new electronic marketplace. The key issue for state and local governments has been how to protect their ability to collect legally due sales and use taxes on goods and services whether they are purchased in a local store or online.

"This industry 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 co-chairman 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. …

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