[Congressional Record Volume 146, Number 81 (Friday, June 23, 2000)]
[Senate]
[Pages S5732-S5733]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 INTERNET TAX MORATORIUM AND EQUITY ACT

  Mr. BREAUX. Mr. President, I am pleased to join my colleague, Senator 
Dorgan, in introducing legislation designated to address the issue of 
Internet sales taxation.
  As a consumer, I know first-hand how popular, simple and easy it is 
to buy items over the Internet. In fact, the Internet saved me at 
Christmas when I bought last-minute gifts for my wife, four children 
and our two little granddaughters.
  But, as a member of both the Senate Finance and Commerce committees, 
I also know Congress has an obligation to examine how these same, tax-
free Internet sales can financially harm businesses and state 
governments.
  Senator Dorgan's bill balances the concerns of state and local 
governments with the importance of maintaining easy access to Internet 
services. It allows state and localities to enter into an interstate 
compact for the purpose of simplifying their sales tax systems for 
remote sales. Once 20 states have joined the compact, Congress can 
disapprove of their efforts. If Congress does not act, those states 
that have joined the compact and simplified their sales tax systems, 
will be authorized to collect sales tax on the purchases their citizens 
make over the Internet.
  Our proposal, recognizing that collecting taxes must not be overly 
burdensome for online retailers, also provides a collection fee for all 
Internet retailers who collect these taxes. It ensures Internet 
purchases are not singled out for special tax treatment at the expense 
of neighborhood businesses, and state and local governments. This 
restores equality, a key aspect of any good tax system, without placing 
an unfair burden on anyone. I believe that this is a fair and equitable 
bill that takes reasonable steps to address the concerns of both online 
retailers and state and local governments.
  We all agree Internet access should not be taxed, and that states and 
localities should not be allowed to impose discriminatory taxes on the 
Internet. In fact, Senator Dorgan's bill extends the moratorium on 
these types of sales for another four years.
  But, I ask, is it fair to levy sales taxes on a person who buys a 
book from his local bookstore, but not his neighbor who buys that same 
book over the Internet?
  I do not think it is fair. It isn't fair to residents who must pay 
the local

[[Page S5733]]

sales tax because they don't own a computer. It isn't fair to local 
retailers collecting the tax who must compete with Internet retailers 
who don't. And, it isn't fair to the states and their local governments 
that are losing money they need to fight crime and fires, and to give 
their children a quality education.
  In Louisiana, sales taxes make up 33 percent of all revenues. 
Economists estimate that Louisiana could lose up to $172 million in 
state revenues by 2002 because Internet sales are not taxed. Other 
states are confronted with similar difficulties. When faced with these 
facts, it's no wonder two-thirds of Americans support Internet sales 
taxes.
  The sales tax is not a new tax. It has been collected by states from 
their citizens for more than 100 years. It should be collected on all 
sales, regardless of whether they occur on Main Street or the 
information superhighway. I urge my colleagues to cosponsor this 
important piece of legislation.
  Mr. CLELAND. Mr. President, I rise today in support of S. 2775. From 
the beginning of the debate on the Internet Tax Moratorium Act, I have 
fought for the sovereignty of state and local elected officials and a 
level playing field for on-line and off-line retailers. This bipartisan 
bill accomplishes both of these goals by allowing the states to work 
together in an Interstate Sales and Use Tax Compact to simplify and 
streamline the existing sales tax system in to a blended rate that will 
enable remote on-line and off-line sellers to collect and remit sales 
taxes without an undue burden. While states work toward this objective, 
the current tax moratorium will be extended four more years.
  In addition to providing greater equity in the tax treatment of both 
Internet-based and Main Street businesses, this legislation also 
provides means for on-line retailers to pay their fair share in 
supporting the communities in which their employees and customers live. 
Local sales tax revenue contributes to the infrastructure and emergency 
services of these communities. Also of importance is the aid these 
funds provide to local education. If the high-tech community is truly 
looking to expand the domestic pool of eligible employees, they should 
be lauding this legislative approach because of the support it will 
provide the local, public school systems. Sales tax revenue will help 
educate the future programmer, software developer, or information 
architect for the virtual world of tomorrow.
  As a former state official, I understand the important role state and 
local officials play in establishing public policy. Although Internet 
sales represent a small portion of overall consumer sales today, Net 
sales are increasing every day. Without a level playing field between 
on-line and off-line retailers, the forty-five states and the District 
of Columbia that collect sales tax could be crippled by the budgetary 
impact.
  The Internet offers a more convenient means of purchasing goods. No 
longer do consumers need to fight traffic, search for a parking space, 
and deal with sometimes unhelpful sales people in order to purchase an 
item. This legislation would further ease on-line purchases by removing 
the confusing and often misunderstood use tax remission policies of 
states. The consumer would be able to take care of any tax questions in 
one transaction.
  Some of my colleagues claim that applying existing sales taxes to the 
Internet will destroy this powerful news, information and commerce 
medium. I, on the other hand, do not see any signs of a slowing of the 
Net. It is growing so quickly that we are running out of Internet 
addresses. If anything, enacting this legislation now will enable new 
``e-tailers'' to adjust their business design to adapt to this policy. 
In addition, this fear completely ignores the fact that these taxes are 
already due. They are not collected because it is too difficult.
  The National Governors Association, the National Retail Federation, 
and the e-Fairness Coalition are among the groups that believe this 
legislation is a proper approach to level the e-commerce playing field. 
I urge my colleagues to join with this bi-partisan group in supporting 
the balanced approach of S. 2775 that accomplishes one of the main 
goals of the Internet Tax Freedom Act: to find a way to simplify the 
existing sales and use tax structure for remote sellers while the 
moratorium remains in place.

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