Editorial: No fairness yet on ‘Net taxation

Friday, March 24, 2000 | 9:59 a.m.

Businesses usually agree on issues involving taxes -- especially the belief that less is better. But a schism has emerged over Congress' Internet sales-tax moratorium, which is to expire October 2001. "Brick and mortar" retailers understandably are angry that they must assess sales taxes on their items while Internet retailers are exempt. This not only puts traditional retailers at a competitive disadvantage, but the loss of this potential revenue also hurts local and state governments. In an effort to mediate this dispute, Congress created a commission to analyze e-commerce. Unfortunately a majority of the commission recommended this week that the moratorium should continue until 2006.

This isn't an issue of conservatives vs. liberals or Republicans vs. Democrats. Even conservative Republican governors, such as Utah Gov. Mike Leavitt, are troubled by this unfair tax policy, arguing that a continued shift to Internet sales -- and with it a corresponding decrease in their sales tax collections -- could devastate state budgets. One estimate, based on a national study, found that Nevada itself could lose as much as $225 million by 2003 on tax-free Internet sales. Congress should wake up to the fact that allowing this inequitable tax policy to continue will harm businesses and states.