 National Association of Counties * Washington, D.C. Vol. 31, No. 5 * March 15, 1999 Table of Contents | Next story NACo, mayors file suit to stop Internet By Beverly Schlotterbeck
The Internet Tax Freedom Act of 1998 created the commission, which is charged with studying the issue of collecting sales taxes on items sold via the Internet, mail order or through other remote sales. Sales on the Internet reached $9 billion last year. The commission was to be composed of three representatives from federal government, eight business representatives and eight state and local government members appointed by Congress. Over last year’s Christmas recess, congressional leaders appointed nine representatives from Internet-related companies such as America Online, Netscape Communications and AT&T Corp. Only six state and local government representatives received appointments: three governors, two state legislators and one mayor. One private citizen was also appointed. Despite efforts by NACo, USCM and others, the appointments were not changed, leading both NACo and USCM boards to unanimously support a lawsuit. "We have been left with no other choice," said NACo President Betty Lou Ward at a news conference announcing the joint action, March 2. Ward characterized the commission and any possible action it might take as a "sham." At stake, she said, are the futures of Main Street merchants, and state and local government tax bases. "Increased Internet sales will hurt both Main Street and mall merchants. The neighborhood stores will be unable to compete. Counties and cities will be hit by a double-edged sword. The lack of revenues from sales on the Internet will be devastating, and the drop in tax revenues from Main Street merchants ... will mean less money for school children, health care for the sick and services for the elderly." NACo Immediate Past President Randy Johnson sees in the Internet business-packed commission "a greedy and cynical bid to create a new elite class of businesses not subject to taxation." Soon after the news conference, Senate Majority Leader Trent Lott (R-Miss.) took to the floor of the Senate, and said "the balance required by the statute has yet to be achieved." Lott added that the "congressional leadership involved in the selection is taking another look at the current makeup of the membership and considering options to resolve the impasse." The first meeting of the commission is scheduled for Williamsburg, Va. in the spring. A court date has not yet been set for the suit.
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