October 04, 2001 Senate Appears Likely to Approve Net-Tax Ban With No E-Fairness Provisions The legislative endgame regarding efforts to reach a compromise on the question of sales tax collection on e-commerce has begun, and, at press time, it appeared likely that a moratorium on new Internet taxes would pass without provisions aimed at leveling the playing field for bricks-and-mortar retailers. On Tuesday, October 2, a bipartisan bill was introduced that would extend the current moratorium--set to end on October 21--for two years. The legislation, proposed by Senators Ron Wyden (D-OR), John McCain (R-AZ), and Patrick J. Leahy (D-VT), was referred to the Senate Commerce Committee. It contains no provisions that would authorize states to collect sales tax on e-commerce if a significant number simplified their tax legislation. Such provisions are contained in a bill proposed by Senator Byron L. Dorgan (D-ND) that is currently before the Senate Finance Committee. The Wyden bill contains language noting a �sense of the Congress that State governments and interested business organizations should expedite efforts to develop a streamlined simplified plan for protecting State revenues affected by Internet use without unnecessarily burdening interstate commerce.� But the proposed bill would not mandate any action. A spokesperson for Senator Dorgan, on October 3, said that he did not support the Wyden bill, adding that Dorgan "is in the process of determining how he will respond" to it. On October 4, Dorgan introduced his own bill, which would extend the moratorium on any new Internet taxes until June 30, 2002. In addition, it, too, would note a �sense of the Congress,� this time that state governments and businesses �should expedite efforts� to develop a streamlined sales tax system that �once approved by Congress would allow sellers to collect and remit sales and use taxes without imposing an undue burden on interstate commerce.� The Wyden bill was proposed on the same day that the Institute for State Studies released a new study forecasting that state and local governments will lose $13.3 billion in revenue this year because of an inability to collect sales taxes on e-commerce sales. The study noted that the figure was 41 percent higher than previous estimates and projected that annual revenue losses would reach $45.2 billion by 2006. In light of the report, the National Governors Association (NGA) urged legislators on Capitol Hill to take the new figures into account as the moratorium deadline approached. "It's time to close ranks, come together, and stand up for Main Street America," said NGA Chairman Michigan Governor John Engler. "Our schools cannot afford to be robbed of this revenue. Fairness requires that remote sellers collect and pay the same taxes that our friends and neighbors on Main Street have to pay." Richard Sullivan, co-chair of the e-Fairness Coalition, said, "Clearly, as sales tax revenues continue to decline, the states will need to make up for the shortfall by shifting an ever-increasing burden to property and income taxes. While our opponents are advocating a free ride for Internet sales, Main Street retailers and consumers will face higher taxes to make up for lost revenues." ABA and a number of the regional booksellers associations, as well as many other retailers and businesses nationwide, are members of the e-Fairness Coalition. Frank Shafroth, director of state and federal relations for the National Governors' Association, told BTW that the NGA would not support the Wyden bill and that a number of state governors were "hoping to exert influence" on senators before a final vote on the moratorium extension. However, despite the efforts of the governors and others, in the wake of the national tragedy of September 11, many observers gave a sales tax simplification bill little or no chance of passing, as congress faces numerous challenges and a pressing moratorium deadline. Shafroth characterized the introduction of the Wyden bill as "not a hopeful sign." ABA COO Oren Teicher commented to BTW that "after the considerable time, effort, and resources many booksellers nationwide have spent working to level the playing fields, we share the disappointment they and other bricks-and-mortar retailers are feeling at the apparent suspension of the debate over e-fairness. Clearly, this issue has been sidetracked by tragic events beyond anyone's control. However, when the time is right, ABA will certainly continue to press for an equitable system of tax collection on Internet sales."   Topics: Sales Tax Initiative, News - Bookselling,