Governors Urge Key Role for Cities and States; Midwinter Meeting Focuses on E-Commerce

By Shafroth, Frank | Nation's Cities Weekly, March 1, 1999 | Go to article overview

Governors Urge Key Role for Cities and States; Midwinter Meeting Focuses on E-Commerce


Shafroth, Frank, Nation's Cities Weekly


Gov. Mike Leavitt (R-Utah), Vice Chair of the National Governors' Association (NGA), called on President Clinton and the Congress to recognize the role of cities and states in deciding how to proceed with taxation of the purchasing of goods and services over the Internet.

In discussing a topic that dominated the nation's governors' meeting in Washington, D.C. last week, Leavitt said a solution needs to be found that is fair to Main Street. The discussion of electronic commerce and its threat to fairness for Main Street retailers, along with education, federalism, and tobacco settle funds, topped the agenda of the NGA 1999 Winter meeting. Leavitt will be a keynote speaker on this issue at NLC's Congressional City Conference on Monday morning, March 8th, along with John Zeglis, the President of AT&T.

Electronic Commerce

The governors met with President Clinton at the White House to express concern that states and local governments are insufficiently represented on the new Advisory Commission on Electronic Commerce named by the four bipartisan Congressional leaders in the wake of the passage of the Internet Tax Freedom Act.

That panel, named last December by Senate Majority Leader Trent Lott (R-Miss.), Ranking Minority Leader Tom Daschle (D-S.D.), former Speaker Newt Gingrich, and House Minority Leader Dick Gephardt (D-Mo.), includes nine high tech corporate representatives, but only five state and local elected leaders, despite the law's requirement for an even balance.

There are no consumer or Main Street business representatives as required by the law. The commission was named by Congress to decide how or whether cities and states may impose sales or other taxes or fees on commerce over the Internet.

The governors reported that while electronic commerce represents an important area of economic growth, they are concerned at the loss of sales tax through purchases by computer and at unfair competition for merchants who have to charge sales tax.

But, despite recognition by both Clinton and Lott that the current make-up of the commission is unbalanced, the governors made little progress during the meeting in getting the federally mandated commission issue settled. NLC, NGA, and other groups have joined in opposition to any seating of the currently named commission, because it contains both an imbalance between computer industry representatives and state and local governments and includes no representative of the nation's 1.6 million Main Street retailers, as required by the law.

Lott, along with new House Speaker Dennis Hastert (R-Ill.), Daschle, and Gephardt, met with the governors briefly immediately after their bipartisan leadership meeting with the President to discuss federal 1999 priorities. "I'm going to try and help find a way to make this [the commission] work--I know this tax base is important to you," Lott said. "I want to make sure the cities' and states' tax base is not devastated." But he provided no specifics.

Leavitt identified two strategies for attaining the required balance between business and governmental interests on the Internet panel. …

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