Newspaper article THE JOURNAL RECORD

Istook Seeks Equal Taxes for Internet, Other Sales

Newspaper article THE JOURNAL RECORD

Istook Seeks Equal Taxes for Internet, Other Sales

Article excerpt

Oklahoma stands to lose more than $298 million a year in sales tax revenue by 2003 if Internet-based sellers are not required to collect the tax required of brick-and-mortar retailers, Fifth District U.S. Rep. Ernest Istook said Monday.

Speaking to the Advisory Committee on Intergovernmental Relations chaired by Sen. Gilmer Capps, D-Snyder, Istook said that the Internet is a very price-sensitive environment, so the seemingly minor differential created by a 5 percent or 10 percent sales tax becomes a major issue.

Nationally, he said, some $35 billion in tax revenue is lost each month, and this is growing by $500 million to $1 billion every month.

Istook is the author of legislation that would permit states to agree on a uniform system of taxing that is identical for Internet and non-Internet retailers. It would also extend through 2005 the moratorium on taxing Internet access, which is due to expire on Sept. 30.

Many people mistakenly believe that the moratorium blocks the taxation of Internet sales, Istook said, but what it actually addresses is the levying of a special tax targeted only at the Internet, such as an access tax.

"You don't fix tax problems by saying that some people don't have to play by the same rules," he said.

Capps said that the lost-revenue issue has caught the attention of the National Conference of State Legislatures, the Council of State Governments and other groups.

"It's so easy to get on the Internet and buy things," he said.

Capps said that as the losses increase they will erode government's ability to offer necessary services such as firefighting and to meet infrastructure needs.

"It is becoming an every more significant problem," Istook said, pointing out that sales tax revenue is the lifeblood of some communities.

"If the state and local tax base dries up, what do people do?" he asked.

One approach, Istook said, could be to boost property taxes, a move that would harm property-based earners such as farmers and other businesses. Another option, he said, could be to seek funding from the federal government to make up for the losses, but that runs counter to Congress' recent move to return more authority to the states.

"Money translates into power," Istook said. "If we don't fix this, we're going to have more power shifted back to Washington, D.C."

Citing a recent U.S. Supreme Court decision that requires a clear connection between the seller and the state trying to levy the tax, Istook said that Congress has the authority to resolve the problem.

"With the problem getting bigger, many people in Congress are trying to address it before we starve out communities," he said.

The no-tax advantage given to Internet retailers could eventually drive some store-based merchants out of business, Istook added.

"Businesses should not be at an advantage or disadvantage due to tax treatment," he said. …

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