WHEREAS:
Internet usage continues to grow and supporting technology is evolving at a rapid rate, as millions of organizations and consumers are now engaging in electronic commerce through the Internet; and
WHEREAS:
Consumer sales transacted through the Internet exceeded $300 billion in 2003, up from just $8 billion in 1998 and $1.5 billion in 1997, and business sales transacted over the Internet are projected to reach $1.3 trillion; and
WHEREAS:
The 1967 Bellas Hess and the 1992 Quill Supreme Court decisions denied states the authority to require the collection of sales and use taxes by out-of-state sellers that have no physical presence in the taxing state; and
WHEREAS:
In 2003, states, counties, and cities lost an estimated $26 billion in sales tax revenues because of remote sellers not collecting sales and use taxes on the Internet, and the Center for Business and Economic Research at the University of Tennessee has estimated by 2006 this revenue loss will climb to $45.2 billion; and
WHEREAS:
States, counties and local governments are entering the fourth consecutive year of serious fiscal crisis with more than $235 billion in budgetary shortfalls caused in no small measure by decreasing revenues; and
WHEREAS:
Inaction or endorsement of the status quo on Internet sales taxation will continue to result in a steady erosion of state and local sales tax revenues, thereby threatening the ability of state and local governments to fund operations and fulfill their responsibilities in education, public safety, transportation, and health and human services; and
WHEREAS:
Since 1999, state legislators, governors, local elected officials, state tax administrators and representatives of the private sector have worked to develop a Streamlined Sales and Use Tax Collection System for the 21st Century, which is a voluntary streamlined sales tax system that would lessen the burden of collection on vendors and enable the collection of sales taxes on goods and services that currently cannot be collected due to the Supreme Court's decisions; and
WHEREAS:
The resulting Streamlined Sales and Use Tax Agreement provides the states with a template for legislation aimed at simplifying and modernizing state sales and use tax administration in order to reduce tax burdens on both "brick-and-mortar" businesses and remote retailers; and
WHEREAS:
Twenty states, representing over 30 percent of the total population of the United States, have enacted legislation to bring their states' sales and use tax statutes into compliance with the agreement; and
WHEREAS:
Legislation has been introduced in Congress to grant those states that comply with the agreement the authority to require all sellers, regardless of location, to collect those states' sales and use taxes; and
WHEREAS:
In 1998 Congress passed and the President signed into law the Internet Tax Freedom Act, establishing a three year moratorium on the imposition of any state and local tax on Internet access, and Congress subsequently extended the moratorium until 2003; and
WHEREAS:
Congress is now debating whether to make the temporary moratorium permanent as well as whether to expand the definition of Internet access in such a way that state and local governments will lose up to $9 billion in revenues they are already collecting if the expanded definition is approved.
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
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 supports simplification and uniformity of sales tax systems that aim to modernize the sales and use tax codes and calls on the remaining states to adopt the Streamlined Sales and Use Tax Agreement; and
BE IT FURTHER RESOLVED:
That AFSCME calls upon the Congress to move swiftly to consider and approve the Streamlined Sales and Use Tax Act so states can go forward with efforts to collect sales taxes due on Internet purchases; and
BE IT FINALLY RESOLVED:
That AFSCME opposes current efforts in Congress to make permanent the Internet access tax moratorium and also opposes efforts to expand the definition of Internet access in a manner that will result in the loss of state and local revenues.
SUBMITTED BY:
Ronald C. Alexander, President and Delegate
Kathleen Stewart, Secretary/Treasurer
OCSEA/AFSCME Local 11
Ohio