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           GOVERNORS WARN COLLECTING INTERNET TAXES WOULDN'T BE EASY
                                       
     Internet taxes October 17, 1997
     Web posted at: 11:12 p.m. EDT (0312 GMT)
     
     WASHINGTON (AP) -- The nation's governors and local officials,
     already having difficulty collecting taxes on catalog sales, said
     Friday a bill aimed at restricting new taxes on the Internet would
     worsen their problems.
     
     "It's very similar," Republican Gov. George V. Voinovich of Ohio
     said at a press briefing. "We've had an ongoing problem in terms of
     how to handle that. We've been continuing to try and work that out
     with those businesses in the states that have the large mail-order
     catalogs."
     
     The National Governors' Association estimates states lose $4 billion
     in sales taxes annually from catalog sales. That's because states,
     cities and counties generally lack the authority to capture sales
     taxes on such sales if the catalog business is headquartered out of
     state.
     
     That problem could only intensify based on the projected growth of
     electronic commerce. Voinovich cited one estimate of $1.5 trillion
     in sales on the Internet by 2002.
     
     "I don't think this is the time for the federal Congress to rush
     into something that will have such a huge impact on state and local
     government," he said.
     
     Joining Voinovich to oppose the Internet tax bill were leaders from
     the National Association of Counties, National League of Cities and
     U.S. Conference of Mayors.
     
     Rep. Chris Cox, a Republican from California, and Sen. Ron Wyden, an
     Oregon Democrat, have sponsored similar bills that would bar any new
     taxes on computer transactions -- such as taxes on Internet access
     or online services -- for an unspecified time while Congress studies
     the whole issue.
     
     The bill would make an exception to the moratorium for income earned
     through an Internet service; local business license taxes, if the
     Internet provider is located within the appropriate jurisdiction;
     and sales or use taxes, so long as they are the same as charged for
     mail or telephone orders.
     
     "We would love to have the bill say what the sponsors say it says,"
     said Brian J. O'Neill, a Philadelphia city councilman, representing
     the National League of Cities. But O'Neill and others say the
     technical language of the bill contains a broad pre-emption of state
     and local taxes.
     
     Wyden spokesman David Seldin strongly disagrees.
     
     "We have bent over backwards to clarify language of the bill so
     there can be no questions" that local governments retain authority
     to levy the same taxes on the Internet that are assessed on catalog
     sales, Seldin said. The bill seeks to halt new local taxes aimed
     specifically at Internet businesses.
     
     One National Governors' Association official said the bill's wording
     would worsen the states' problem of collecting sales taxes on
     catalog sales.
     
     "We know that we have to sit down with the industry and make the
     sales tax work on Main Street, on catalogs and on Internet, in some
     simplified, clear and technologically neutral way," said Tim Masanz
     of the association's economic development group.
     
     "If Congress goes on record and says that Internet sales are the
     equivalent of catalog mail-order sales, those talks are doomed," he
     added.
     
     "I can understand their desire to fight that battle but it would
     certainly not do much good to create a situation where you are
     favoring one at-home purchase over another," said Seldin.
     
     Copyright 1997   The Associated Press. All rights reserved. This
     material may not be published, broadcast, rewritten, or
     redistributed.
     
    
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  Related story:
     * House panels back Internet taxation bill - October 9, 1997
       
  Related sites:
  
     Note: Pages will open in a new browser window
     * THOMAS - Legislative Information on the Internet
          + HR 1054 - Internet Tax Freedom Act
     * U.S. House of Representatives
          + Commerce Committee
          + Judiciary Committee
     * National Governors' Association
     * National League of Cities
       
     
     
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