[Congressional Record Volume 147, Number 159 (Friday, November 16, 2001)]
[Senate]
[Pages S11995-S11996]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   INTERNET TAX NONDISCRIMINATION ACT

  Mr. REID. Mr. President, yesterday the Senate decided to ban, for two 
more years, Internet access taxes and discriminatory taxes on e-
commerce. For American Internet users, I fully support this decision, 
as did the vast majority of my colleagues.
  I also supported the Senate's decision to more thoroughly consider a 
meritorious yet deficient proposal that would have helped States 
eventually require interstate retailers to collect tax on all sales, 
even to States where the retailer has no substantial presence. E-
commerce and brick and mortar businesses should be placed on a level 
playing field.
  On behalf of the important State and local government programs that 
sales tax revenue support, I firmly believe this issue needs to be 
resolved very soon. I was concerned, however, that the proposed 
legislation had a few key shortcomings.
  First, I believe the proposal did not give the States clear guidance 
on what Congress expects them to address as they simplify their sales 
tax rules. The Supreme Court has said that the current State sales tax 
system is unconstitutionally complex, but that Congress can remedy that 
problem. On one particular point, the proposal did not tell the States 
to ensure that no tax loopholes be adopted that would allow some 
sellers to avoid tax collection responsibilities. I believe that 
Congress must not allow tax discrimination among retail business 
models.
  Second, I believe that Congress will need expert assistance to help 
analyze the State's efforts to make their tax systems constitutional, 
especially if we hope to consider their efforts quickly. For that 
reason, I believe there must be a timely federal review of the States' 
eventual agreement before it is presented to Congress. Also, I believe 
a federal agency is much better positioned than Congress to ensure 
continuing compliance with the interstate agreement.
  I did not support the Enzi/Dorgan amendment because it would have 
added complexity, making a retroactive change in the law, that is 
unclear, and did not go through a complete vetting process. This was a 
meritorious but flawed amendment. The House would not have accepted 
this legislation with this amendment.
  I look forward to working with my colleagues, the States, and 
industry next year on a bill that addresses the States' legitimate tax 
revenue needs and ensures that the simplified State tax system is fair 
to all retailers and can be efficiently considered and monitored.
  I will not likely support another moratorium. We must take the steps 
necessary to bring our interstate tax rules into the 21st Century.
  Mr. KERRY. Mr. President, I voted in support of the Enzi Amendment to 
the Internet Tax Nondiscrimination Act because I believed that after 
nearly 2 years of working towards a compromise on this very important 
issue, it was time to move forward and provide States with guidance on 
how to level the playing field for Internet and bricks and mortar 
retail establishments. Of equal importance is that in this time when 
State coffers are shrinking and State spending requirements are 
increasing with the need to pay for the increased security needs each 
State now faces, we cannot in good conscience short change the States.
  Let me be clear. I do not support a tax on the Internet. The Enzi 
amendment did not tax the Internet. It simply provided a way to move 
towards a system where States can collect taxes that are already owed. 
Moreover, I strongly support a permanent ban on Internet access taxes. 
The Enzi amendment intended to create such a ban. If there were 
questions as to whether that intent was fully carried out by the 
language as drafted, I believe we could have addressed those questions 
adequately in conference. I oppose discriminatory Internet taxes. 
Again, the Enzi amendment banned such taxes for 5 years and ultimately 
such a ban will be made permanent.
  It is also important to point out that the Enzi amendment, had it 
succeeded, would not have been the final word on whether States could 
begin collecting taxes owed on Internet sales. After up to 5 years of 
working towards a compromise, and after at least 20 States agreed to 
simplify their tax collection systems in a uniform manner, Congress 
still would have had the opportunity to vote down a simplification 
plan, if we believed it was unfairly burdensome to Internet or other 
remote sellers. That provision provided a critical measure of assurance 
that States could not unfairly insist on the collection of taxes.
  I was an original cosponsor of the Internet tax moratorium that only 
recently expired, and I hope, with the additional 2-year moratorium 
that we have just enacted we will enjoy some measure of success in 
forging a compromise that will have broad support. I will continue to 
work with my colleagues to ensure that Internet companies are never 
required to divine the tax rate of a consumer in one of thousands of 
taxable jurisdictions. In addition, I will work to ensure that uniform 
definitions for taxable property are part of any simplification plan, 
so that companies do not have to analyze different definitions for the 
same item in different states. Uniformity in auditing procedures, 
filing requirements and remittance forms will also be goals we will 
continue to try to reach.
  Equity dictates that we do not treat the taxation of goods 
differently simply because of the method by which

[[Page S11996]]

they were sold. I look forward to continuing to work on this issue so 
that we can find a way to reach that goal that is fair to States, 
consumers, Internet companies and traditional retailers.

                          ____________________