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Alaskans love to do their shopping via catalogues and the Internet. E-commerce is burgeoning and its effect on local sales is beginning to be felt. Most of our local merchants are feeling the crunch, while a few are capitalizing on the new opportunities that e-commerce presents in marketing their goods and services to new customers. Competing in this new arena makes good business sense. The issue is with taxation.
When we buy cars and boats in Seattle or do our shopping through catalogues and the Internet, local sales taxation takes a hit. This loss of tax revenues has a rippling effect as other sources of revenue must be developed to offset the loss and sustain the infrastructure our government is responsible for managing.
We can expect that the Internet-related impact on local sales tax would continue to grow rapidly. This is of special concern in Alaska because of the high percentage of Internet-enabled homes and offices.
Currently, online merchants have a huge advantage over our bricks-and-mortar merchants because they continue to enjoy exemption from charging sales and use taxes attached to online transactions.
Congress is addressing this concern. Two bills have been introduced in Congress that attempt to remedy the situation. The best solution is contained in the Enzi-Dorgan bill. This legislation would extend the moratorium on any new or discriminatory taxes on the Internet, thereby ensuring that the Internet itself remains tax-free. At the same time, the bill authorizes and encourages states to continue their efforts to streamline sales tax systems so that all businesses - local and Internet based - will be able to collect sales and use taxes efficiently.
The second bill, however, would have the reverse effect. The bill sponsored by Senators Wyden and Leahy requires that all 50 states agree on a single sales tax system, which Congress would then ratify. This is a tall order. The methods of assessing and collecting sales taxes across the 50 states vary widely. The prospect that common ground could be found in a reasonable length of time by the 107th Congress is pretty far fetched.
Our own Sen. Ted Stevens is in a powerful position to influence the outcome of this much needed fair tax legislation. Stevens rests with the "undecideds." We would hope that he would leverage his influence to the benefit of our local merchants and our communities. While the economy remains soft our local merchants need all the support they can get. Competition in many sectors is fierce.
Fair application of sales and use taxation for all retailers will even the playing field and eliminate the advantages now held by remote Internet businesses offering tax-free transactions.
Without question, standards of uniformity are needed to streamline the country's sales and use taxation programs in order for Internet-based businesses to achieve compliance. We must support legislation that will enable local and state governments to act swiftly and efficiently - before the erosion of local sales taxes begins to seriously impact the programs and services provided by local government.
The Enzi-Dorgan bill provides the best way to achieve this goal. Sen. Stevens's support is needed. Let your voice be heard. Contact him today.
The Honorable Ted Stevens
United States Senate
522 Hart Senate Office Building
Washington, D.C. 20510
(202) 224-2354 FAX