By Nick Patience
The e-commerce advisory commission appointed last hear by Congress decided this week to ask representatives of state tax authorities to come up with ways of collecting taxes on sales made over the web and gave them a set of criteria to work towards. However, the commission was divided over whether it even wanted to do this. Some, including the chairman, Virginia governor James Gilmore, have doubts as to whether the commission should be assuming the need to collect taxes at all. However, the corporate members of the board supported the initiative and it was approved. But due to the onset of Hurricane Floyd in Gilmore’s home state, the meeting was wrapped up early on Wednesday in New York so he could get back to coordinate evacuation efforts. A final email vote will now be taken next week on the proposal, which calls for state representatives to present their proposals at the next meeting of the commission in San Francisco in December.
The resolution to ask the state tax collectors for their suggestions was put forward by Michael Leavitt, the Republican governor of Utah. He asked the commission to come up with half a dozen or so criteria that could be examined by a committee of tax collectors and some technical staff that was formed at the recent annual meeting of the National Governors Association (NGA). He said that one of the closed-door meetings at the NGA meeting last month in St Louis, Missouri was almost totally about the issue of taxation on e-commerce. Around 30 of the 50 governors put forward people to form a group of mainly technical people to come up ways of making sales tax on the internet work, and this group will be augmented by the tax collectors.
Most of the criteria the commission agreed upon came from Leavitt’s initial suggestions. The commission wants any tax scheme to be, first and foremost, simple. It also agreed that the proposals coming from the group should not call for any new taxes; they should not place any undue burdens on sellers; the privacy of consumers must be protected at all times; the sovereignty of the states should be respected; buyers should be treated the same across the whole country; and the potential for multiple audits of companies should be avoided.
In addition to Gilmore, the motion was also opposed by Grover Norquist, president of the conservative lobby group, Americans for Tax Reform, and by Stanley Sokul, a consultant for the Association for Interactive Media. However, it was supported by Michael Armstrong, CEO of AT&T Corp; Ted Waitt, CEO of Gateway Inc; and David Pottruck, president of Charles Schwab Corp. These three had been fairly quite during the day’s proceedings, leaving it to the politicians and lobbyists to do most of the talking. The corporations represented on the panel, which also included MCI Worldcom Inc, Time Warner Inc and America Online Inc, have provided much of the funding for the commission’s work, along with the state of Virginia. They may get some of it back if Congress approves retrospective funding for the commission next year.
The commission approved a separate motion put forward by Norquist with only one dissenter Gene LeBrun, president of the National Conference of Commissioners on Uniform State Laws. The motion supported the Clinton administration’s policy of a moratorium on internet tariffs and also called for abolition of the 3% telecommunications tax that was implemented during the Spanish- American war as a tax on the privileged few who had telephones one hundred years ago, according to Norquist.
It didn’t get round to properly examining international taxes, tariffs and duties associated with e-commerce as it was scheduled to, because of the amount of time spent on agreeing these criteria to give to the state tax collectors and the onset of the hurricane. There are still no clear deliverables for the commission, which is due to be wrapped up in April.
