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=09Let 'Em See Something In Writing=20
?????Hurricane Floyd was creeping its way up the coast to New York City whe= n=20 the Advisory Commission on Electronic Commerce held its last meeting=20 mid-September. Sensing impending travel catastrophes coupled with a mass=20 exodus down the shoreline to Washington after the session's adjournment, th= e=20 group appeased a eleventh-hour call from Utah Gov. Michael Leavitt, R, to= =20 request proposals from the public on how to best deal with the prospect of= =20 taxing e-commerce. And this week, after around 30 proposals were submitted = to=20 the commission, a different kind of storm began to brew.=20 ?????Consumer advocacy groups, local government organizations and=20 commission-watchers unleashed a flurry of press releases and media events t= o=20 announce their proposals, which were due to the commission on Nov. 15. Many= =20 of the submissions, which were called to meet a set of 18 criteria ranging= =20 from "meeting constitutional muster" to "radically simplifying the sales ta= x=20 system," responded to Leavitt's plan. Also due on that date were comments t= o=20 be considered for the report-drafting subcommittee's issues and options=20 paper, which will serve as a compilation of ideas on the topic of electroni= c=20 commerce and taxation for the entire commission to consider while it drafts= =20 its final recommendation.=20 ?????"What I think we're seeing is a tremendously positive development," sa= id=20 Jim Lucier, a Prudential analyst who worked with Americans for Tax Reform's= =20 Grover Norquist as he lobbied while the legislation creating the commission= =20 was being drafted. "Instead of constantly squabbling, you have important=20 groups within the commission working hard to get majority positions."=20 ?????Because infighting has plagued the commission from its beginning, a=20 majority may be the most difficult endeavor many of these groups have worke= d=20 for. The 19-member commission needs a two-thirds majority vote to approve a= ny=20 recommendation, and the group already has shifted into pro- and anti-tax=20 factions, with only a few still undecided. The proposals are making their= =20 rounds among the commission-members, and the next meeting is Dec. 14. While= =20 there are a host of groups that have submitted their propositions it appear= s=20 that three are getting the majority of the commission's attention (and one,= =20 specifically, because it was drafted by the group's chairman, Virginia Gov.= =20 Jim Gilmore). Following is a synopses and analysis of the three plans that= =20 have the best chance of succeeding:=20 =09Title: Streamlined Sales Tax System for the 21st Century (Zero-Burden Pl= an)=20 Sponsor: National Governors' Association, National Conference of State=20 Legislatures, National Association of Counties, U.S. Conference of Mayors,= =20 Council of State Governments, International City County Management=20 Association. While the remaining member of the "Big Seven" local=20 organizations, the National League of Cities, has backed the proposal's=20 intent, it is waiting until its annual meeting in December to vote on=20 supporting it officially. Description: The idea centers around establishing a "trusted third party," = or=20 tax clearinghouse, to collect and remit sales taxes based on the purchaser'= s=20 tax jurisdiction. When an online order is placed, the seller would notify t= he=20 clearinghouse and credit card company to determine the jurisdiction of the= =20 buyer. The third party would notify the seller of the appropriate tax amoun= t,=20 the credit card company would collect the funds and then remit the tax to t= he=20 clearinghouse. The clearinghouse would then distribute the funds to the=20 states and localities and would be paid by a percentage of what it collects= .=20 The third parties would be licensed by the state and the necessary software= =20 required of each vendor would be paid for by the state. History: The plan was drafted after a series of marathon meetings by the=20 local organizations that argue they are jeopardized because of lost sales t= ax=20 revenues from e-commerce. Organizers of the proposal, which is being touted= =20 by Gov. Leavitt, say that regardless of the commission's final decision the= y=20 will begin pushing the system to state legislatures for adoption. Under the= =20 Internet Tax Freedom Act, no new taxes may be applied to e-commerce, but=20 existing taxes, such as sales and use taxes, are not covered. The sponsors= =20 say they do not need the commission's go-ahead in order to implement the=20 system, which would be optional by state and would not require all 50 state= s'=20 involvement to function. Comments: The plan is widely criticized by anti-ta= x=20 advocates and those who believe that taxing e-commerce will stifle its=20 growth. Others say that the pro-tax movement is only supported by the=20 national government organizations and not their members, with Leavitt being= =20 the notable exception, and criticize it for not receiving many other=20 individuals' support. But the organizations argue that unless states and=20 localities have the right to determine revenue-raising activities, control = of=20 local services like education and law enforcement ultimately will be given = to=20 the federal government. "Thomas Jefferson would roll over in his grave" if= =20 that happens, Leavitt said.=20 =09Title: E-Freedom Coalition Proposal Sponsors: The E-Freedom Coalition's membership involves over 20=20 organizations, including Americans for Tax Reform, Citizens Against=20 Government Waste, Competitive Enterprise Institute, Consumer Alert, Heritag= e=20 Foundation, Progress and Freedom Foundation and State Policy Network.=20 Description: The group supports a ban on collection of sales taxes on=20 electronic commerce and the repeal of the 3 percent federal excise tax on= =20 telecommunications. It also would ban discriminatory Internet taxation and= =20 taxes on Internet access. The group endorses slashing local=20 telecommunications taxes and wants to see interstate telecom property taxes= =20 reduced and controlled with federal protections. History: The E-Freedom=20 Coalition unveiled its proposal at a joint press conference with legislatio= n=20 by House Budget Committee Chairman John Kasich, R-OH, that would ban Intern= et=20 sales taxes. Kasich's Internet Tax Elimination Act, H.R. 3252, would make= =20 permanent the three-year moratorium on discriminatory Internet taxes passed= =20 in the Internet Tax Freedom Act. Fellow Ohio Republican John Boehner joined= =20 Kasich in sponsoring the measure. Comments: Americans for Tax Reform's=20 Norquist has led the anti-tax movement on the commission. Stan Sokul, an=20 independent consultant for the Association for Interactive Media was also o= n=20 hand to support the proposal. Advocates are promoting the plan by saying it= =20 would protect consumers' privacy by not collecting personal information fro= m=20 users to determine tax jurisdictions.=20 =09Title: No Internet Tax Sponsor: Virginia Gov. Jim Gilmore, R, chairman of the Advisory Commission = on=20 Electronic Commerce Description: Gilmore's proposal is almost identical in= =20 ideology to the E-Freedom Coalition plan. He maintains Congress should ban= =20 all sales and use taxes on e-commerce and protect businesses from state=20 income and business activity taxes simply because of their virtual presence= =20 in a state. Gilmore also has proposed the elimination of the 3 percent=20 federal excise tax on telecommunications and has called for the federal=20 government to give states $1.7 billion each year for the lost revenue from= =20 the repeal of sales taxes on e-commerce transactions. He also has proposed= =20 that states be allowed to use federal welfare money to purchase computers a= nd=20 Internet access for needy families. History: Gilmore's outline was submitted to the policies and options paper= =20 that the commission is preparing, not under the call for proposals suggeste= d=20 by Leavitt. But because he is the chair of the commission and had maintaine= d=20 that he would remain neutral, Gilmore's actions have received criticism fro= m=20 many on the state and local side of the debate. But he has defended his=20 actions. "After hearing dozens of experts on an entire range of e-commerce= =20 issues, I felt it was time to put forward my vision. It can be summarized i= n=20 three words: No Internet Tax," Gilmore said in a recent speech. Observers= =20 have speculated that Gilmore's plan could be meshed with the E-Freedom=20 Coalition's to come up with a proposal agreeable to both parties. And=20 suggestions such as the welfare provision even have appeased pro-tax groups= ,=20 which have said solutions such as those may be the most agreeable for a=20 consensus statement. Comments: The National Association of Counties and oth= er=20 local groups remain opposed to the plan's provisions calling for the federa= l=20 government to allot funds to localities. "The fact remains that Gilmore's= =20 proposal means county officials will be even more dependent on state and=20 federal governments to fund their local services," said NACo's Executive=20 Director Larry Naake. "This isn't my idea of returning more control and=20 authority to the local citizen." =01*by Stephanie Lash
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