[Congressional Record Volume 147, Number 141 (Thursday, October 18, 2001)]
[Senate]
[Pages S10810-S10811]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           INTERNET TAXATION

  Mr. DORGAN. Mr. President, I am going to propound a unanimous consent 
that I understand may be objected to, but for the moment I will 
describe what I am about to do and why I want to do it today.
  As most of us know who have worked on an issue called the Internet 
tax moratorium issue, the moratorium that now exists with respect to 
Internet taxation expires on Sunday of this week. The expiration of the 
Internet Tax Moratorium Act on Sunday means that next week there will 
no longer be the prohibition that exists in that act.
  Many of us believe we ought to do a couple things.
  One, the Internet Tax Moratorium Act is one that I supported because 
it would have prohibited additional States from imposing taxes on 
access to the Internet. I support that. It actually grandfathered some 
States. I would have been content to eliminate the grandfathering even. 
I don't think we ought to be taxing access.
  It also said that we will not allow discriminatory or punitive taxes 
with respect to Internet transactions. I supported that as well and was 
happy to vote for that legislation. It had an end date on it. That end 
date is this Sunday.
  What we have been trying to do for a long time is to construct an 
extension of the Internet tax moratorium, which I support, and attach 
to that a provision that would allow State and local governments to 
solve a very significant problem they are confronted with; that is, 
remote sellers are selling all across this country now in a significant 
way and in many instances--in fact, most instances--they are not 
required to collect local taxes when they make those sales.
  The remote sellers say it would be very difficult for them to collect 
the local sales and use taxes because you have thousands of 
jurisdictions around the country with different tax rates, different 
bases, and so on. It would be horribly complicated to subject a remote 
seller to all of those different standards and different jurisdictions. 
I am sympathetic to that.
  For that reason, I believe State and local governments ought to be 
required to simplify the tax system by which consumption taxes would be 
imposed on remote sales.
  At the moment, the courts have said the State and local governments 
may not impose their consumption taxes on remote sales unless the 
remote seller has a location in that State. The only change that could 
occur that would allow them to enforce a collection would be the 
Congress, under the commerce clause, describing a different nexus so 
that State and local governments could in fact enforce a requirement of 
collection. I don't believe we ought to do that unless we also require 
State and local governments to dramatically simplify their sales and 
use tax system. And when we do that, State and local governments should 
then be able to enforce a collection.
  You have two things: Requiring a simplification of a system, and then 
requiring remote sellers to collect the tax and remit it to the States.
  Why is this important? It is important for two reasons. One is 
fairness. Main street sellers are required to collect the tax, and 
their competitors from a remote circumstance are not required to 
collect the tax. That is not a fair situation.
  Second, there is a substantial amount of lost revenue, much of which 
would be used to finance schools in this country, and that lost revenue 
is injuring the tax base of State and local governments and injuring 
the opportunity to fund education which is funded, as most of us know, 
predominantly by State and local taxes.

  What I propose is the following: We extend the moratorium for about 8 
months to next June 30. That moratorium extension would be accompanied 
by a sense of the Congress in my bill. It is only a two-page bill: It 
is a sense of Congress that State governments and interested business 
organizations should expedite efforts to develop a streamlined sales 
and use 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 House of Representatives, I believe this week, passed a 2-year 
extension on the moratorium, with really nothing involved in it, that 
actually begins to address the other side of the

[[Page S10811]]

equation; that is, how do you deal with all of this lost revenue and 
the need to fund our schools and education?
  We really need to deal with both issues. I agree with the extension 
of the moratorium. What I propose is that we extend the moratorium to 
next June 30, do that immediately--I will propose a unanimous consent 
request when I send this to the desk--and between now and then, ask all 
of the sides involved to get serious and get this done, develop a 
compact we can work on together, and therefore require simplification 
of local tax systems and allow the State and local governments to 
enforce collection.
  My colleague, Senator Enzi from Wyoming, with whom I have worked, as 
well as Senator Voinovich, Senator Wyden, Senator McCain, Senator 
Graham of Florida, and many others have worked on this issue for a long 
while. We have not met success at this point. But Senator Enzi has been 
working very hard on it and another approach that would have a longer 
extension but would establish a more concrete system by which the State 
and local governments could develop a compact.
  I am going to be a cosponsor of that proposal. I know he is working 
with other colleagues on it. I think that is good work as well. In the 
interim, I didn't want people to think that those of us who were 
working to solve both problems here--and there are two problems--were 
insensitive to the need to extend the moratorium. For that reason, I 
propose today that we extend the moratorium to next June 30. I will ask 
unanimous consent to do so, and I will send S. 1504 to the desk.

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