State governors are fighting to get congressional approval for sales tax on Internet commerce.
More than 40 of the nation’s governors are sending a letter to all House and Senate members this week that will urge Congress not to extend a 1998 moratorium on other Internet taxes, unless states are given a way to collect online sales taxes, the Washington Post reported.
The Post quoted a draft of the letter that said: “If you care about a level playing field for main street retail businesses, and local control of state’s governments and schools, extend the moratorium on taxing Internet access only with authorization for the states to streamline and simplify the existing sales tax system.”
The moratorium on Internet sales taxes expires Oct. 21. A House judiciary subcommittee recently passed a measure that extends the moratorium without addressing the sales-tax issue. The full committee is planning to vote on this measure in early September, said the Post.
Estimates say uncollected Internet sales taxes will be as high as $13 billion by 2004. This loss could be high enough to compel states to choose between reducing spending or levying new taxes, according to the Congressional Budget Office.
Opponents, including the Direct Marketing Association, argue that simplifying sales taxes across the country could take years. And, they say, extending the moratorium on Internet taxes is necessary for the health of the Internet.
A 1992 Supreme Court decision ruled that states cannot require out-of-state retailers to collect sales taxes unless they have a presence in the state.
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