FAIR COLLECTION OF SALES TAXES ON ELECTRONIC COMMERCE

WHEREAS, state sales taxes provide 48 percent of total state tax revenue; and

WHEREAS, because this revenue is vital to the provision of quality public services, the Federation of Public Employees program and policy council authorized a task force to research the implications of the changing economy on this tax; and

WHEREAS, the viability of the sales tax has been threatened by the expansion of the service economy and the growth of remote commerce via the Internet and catalog sales; and

WHEREAS, in 2001, state and local government lost an estimated $13.3 billion in annual sales tax revenues as a result of this dramatic growth of catalog and electronic commerce, with the number expected to increase annually; and

WHEREAS, by 2011, the Center for Business and Economic Research at the University of Tennessee estimates that states will lose from 2.6 percent to 9.92 percent of their total state tax collections to e-commerce losses; and

WHEREAS, the federal courts have ruled that because of the complexity of the more than 700 different state and local sales tax codes, remote vendors, including catalog companies and retailers using the Internet, are not responsible for collecting state and local sales taxes from consumers; and

WHEREAS, because of inequalities in computer access, commonly referred to as the digital divide, the privileged will be more likely to purchase online thus avoiding the sales tax; placing the sales tax burden disproportionately on poorer families; and

WHEREAS, 37 states that use a sales tax have created a compact to streamline and simplify these taxes to alleviate the administrative burdens on remote sellers; and

WHEREAS, following debate, the 107^th Congress failed to act to approve the use of such a system for the collection of sales tax on electronic commerce:

RESOLVED, that the AFT support the passage of federal legislation allowing for the collection of sales tax on electronic commerce and other remote purchases; and

RESOLVED, that the AFT continue to follow the Streamlined Sales Tax Project to insure that the interests of our members are included in the final product; and

RESOLVED, that the AFT urge state federations to take action on the state level that complements the work of the AFT in support of this federal legislation.