NEWTON, MASS. (02/23/2000) - Despite published reports to the contrary, Virginia Governor. James Gilmore said he's still adamantly opposed to allowing the government to collect sales taxes on Internet transactions.
Gilmore said he was misinterpreted in a story in today's edition of the The Wall Street Journal, which reported that he now favors a less-than-permanent ban on Internet taxes. Gilmore, chairman of the federal Advisory Commission on Electronic Commerce, said he's still very much against taxing business-to-consumer transactions over the Internet.
Gilmore made his comments at a luncheon sponsored by the Associated Industries of Massachusetts Technology Council held here.
"I'm in a minority because of my views (on Internet taxation)," Gilmore said.
"But (we know) the governors in favor of Internet taxes are wrong."
Gilmore and Massachusetts Governor Paul Cellucci, who also spoke at the luncheon, are urging Congress to permanently ban all Internet-related taxes.
They say such taxes unfairly burden working men and women as well as poor people.
The two governors said consumers should be allowed to choose where to shop.
They said it was up to an individual to decide if he wants to pay sales tax in a brick-and-mortar store in exchange for being able to see what he's buying, or shipping and handling charges in exchange for the convenience of making a purchase over the Internet.
Cellucci argued that the sales tax issue stems from laws that were written in the 1930s that don't apply to today's technologically advanced society.
"E-commerce has the potential to raise living standards around the globe," he said. "We shouldn't put impediments in its way."
Cellucci also said the Internet is responsible for an estimated 2.3 million new jobs - 450,000 in Massachusetts alone. Job creation, he said, is more valuable than the potential tax revenue generated from e-commerce.
In 1998, Congress passed the Internet Tax Freedom Act, which established a three-year moratorium on new Internet access fees as well as new state and local taxes on Internet transactions. The law also created the advisory commission to recommend a course of action to Congress that would go into effect when the current moratorium expires on Oct. 21, 2001.
While Congress debates the issue, members of the advisory commission - which meets for the last time next month - are trying to develop a fair and equitable proposal for taxing e-commerce. Settling on a proposal may not be easy, though.
Business interests on the panel favor a proposal calling for a five-year ban on Internet sales taxes and urging states to radically simplify their tax-collection processes, while others, like Gilmore, will settle for nothing less than a complete ban.
Businesses and proponents of an Internet sales tax contend that traditional retailers, which collect and remit taxes to state and local governments, will suffer because consumers will choose to shop on the Internet to avoid paying sales tax.
But Cellucci and Gilmore said consumers are the only group that will suffer if an Internet sales tax is created.
"Businesses are not being taxed, consumers are," Gilmore said.
According to Cellucci, despite the growth of e-commerce over the past six months, sales tax revenue in Massachusetts was up 8%, not down.
"There is no evidence of any reduction of sales taxes because of e-commerce," Cellucci said.