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RESOLUTION NO. 2000-10 WHEREAS, the use of new communications technologies, including the Internet, as a way to conduct sales of goods and services is accelerating; and WHEREAS, out-of-state vendors who conduct sales via the Internet, mail order, and phone, under many circumstances, are not required by law to collect existing sales and use taxes imposed by state and local governments in which the purchaser resides; and WHEREAS, the primary barrier to collecting taxes on remote sales is the Supreme Court's ruling in Quill v. North Dakota, which defers to Congress, and only Congress, to authorize states to require remote vendors to collect taxes in a manner that does not unduly burden interstate commerce; and WHEREAS. current laws create a compettUve disadvantage and great inequities between merchants who sell from traditional "Brick-and-mortar" establishments and those who sell from electronics stores; and WHEREAS, this migration of sales to the Internet is restricting the ability of state and local governments and school districts to collect taxes which finance essential public services including but not limited to police, fire, emergency medical services, education, social services, infrastructure development, and local healthcare; and WHEREAS, the United States Constitution reserves for the states the right to collect and impose taxes; and WHEREAS, 45 states and the District of Columbia collect over 40 percent of overall revenue from sales taxes to fund vital public services; and WHEREAS, a recent University of Tennessee study estimates that state sales tax revenue losses in 2003 will exceed $10 billion; and WHEREAS, the City of Moscow estimates a loss of sales tax revenue which could result in a significant reduction of essential public services; and WHEREAS, the Advisory Commission on Electronic Commerce, established by the Internet Tax Freedom Act, failed to address, in a fair and equitable manner, the growing volume of tax free sales transactions occurring over the Internet, which have put "brick-and-mortar" stores at a competitive disadvantage; and WHEREAS, the Commission's report to Congress does not effectively address the tax losses state and local governments will experience if the Internet becomes a permanently tax-free retail market. NOW THEREFORE, be it resolved by the Mayor and City Council, that the City of Moscow opposes any congressional action to implement the Advisory Commission on Electronic Resolution 2000-10 Page I of2 ---PAGE BREAK--- Commerce's report proposals that would preempt state and local sovereignty, guaranteed by the lOth Amendment of the United States Constitution; and BE IT FURTHER RESOLVED that the City of Moscow supports simplification of state and local sales taxes, and urges states to move expeditiously to craft and approve model legislation; and BE IT FURTHER RESOLVED that the City of Moscow opposes any congressional efforts to expand the current moratorium to cover state and local sales and use taxes; and BE IT FURTHER RESOLVED that the City of Moscow opposes any efforts to extend the current moratorium unless the extension is for two years or less and is directly linked to congressional authorization to states that simplify their sales and use tax system to collect use tax on all remote transactions. PASSED by the City Council and APPROVED by the Mayor this L day of May, ;J J. Christine Bainbridge, City Clerk Resolution 2000-l 0 A/ J 1 1/u.tl//,j arsh ll , Comstock, M;:cr t Page 2 of2