WHEREAS:

The Internet is a collection of computer networks that enables the user to communicate electronically with other users around the world; and

WHEREAS:

Millions of organizations and consumers are engaging in electronic commerce through the Internet; and

WHEREAS:

Consumer sales transacted through the Internet are projected to exceed $100 billion in 2002, up from just $8 billion in 1998 and $1.5 billion in 1997; and

WHEREAS:

By 2003, consumer sales transacted over the Internet are projected to reach $144 billion and business sales transacted over the Internet are projected to reach $1.3 trillion, seven and 12 times greater, respectively, than estimates for 1999; and

WHEREAS:

Businesses, consumers, and others engaging in interstate and foreign commerce through the Internet could become subject to complex tax structures in multiple jurisdictions; and

WHEREAS:

Under current court decisions, Internet and other remote sellers cannot be legally compelled to collect sales and use taxes from consumers in other states unless the seller has a physical presence in the state; and

WHEREAS:

The failure to collect sales and use taxes from remote sellers places local "main street" merchants at an unfair competitive disadvantage; and

WHEREAS:

State sales and use tax revenues comprise, on average, one third of state revenues and provide over half of state revenues in six states; and

WHEREAS:

Inaction or endorsement of the status quo on Internet sales taxation will result in a steady erosion of state and local sales tax revenues; and

WHEREAS:

States have the primary responsibility for education, public safety, transportation, and health and human services; and

WHEREAS:

The projected growth of electronic commerce transactions will have a substantial negative impact on state sales and use tax revenues, costing states an estimated $20 billion in each of the next five years; and

WHEREAS:

The erosion of sales tax revenue is likely to result in higher property taxes for homeowners and higher state income taxes as states try to recoup lost sales tax revenues.

THEREFORE BE IT RESOLVED:

That AFSCME believes that state and local tax systems should treat transactions involving goods and services, including telecommunications and electronic commerce, in a competitively neutral manner that will strengthen and preserve the sales and use tax as a vital state and local revenue source and preserve fiscal sovereignty; and

BE IT FURTHER RESOLVED:

That the Internet and Internet vendors should not receive preferential tax treatment at the expense of local "main street" merchants, nor should such vendors be burdened with special, discriminatory or multiple taxes; and

BE IT FURTHER RESOLVED:

That AFSCME encourage cooperative efforts by states to simplify the operation and administration of sales and use taxes; and

BE IT FINALLY RESOLVED:

That AFSCME continue to oppose any federal action or legislation to preempt the sovereign and constitutional right of the states to determine their own tax policies in all areas, including telecommunications and electronic commerce.

SUBMITTED BY:

Roger Moller, President and Delegate 
AFSCME Local 109, Council 2
Trina Young, Delegate 
AFSCME Local 275, Council 2
Washington