CNN logo Navigation Infoseek/Big Yellow Pathfinder/Warner Bros Tech banner IBM Active Channel for Microsoft Internet Explorer. Find out about your chance to win a computer click here for official rules and information. rule GOVERNORS WARN COLLECTING INTERNET TAXES WOULDN'T BE EASY Internet taxes October 17, 1997 Web posted at: 11:12 p.m. EDT (0312 GMT) WASHINGTON (AP) -- The nation's governors and local officials, already having difficulty collecting taxes on catalog sales, said Friday a bill aimed at restricting new taxes on the Internet would worsen their problems. "It's very similar," Republican Gov. George V. Voinovich of Ohio said at a press briefing. "We've had an ongoing problem in terms of how to handle that. We've been continuing to try and work that out with those businesses in the states that have the large mail-order catalogs." The National Governors' Association estimates states lose $4 billion in sales taxes annually from catalog sales. That's because states, cities and counties generally lack the authority to capture sales taxes on such sales if the catalog business is headquartered out of state. That problem could only intensify based on the projected growth of electronic commerce. Voinovich cited one estimate of $1.5 trillion in sales on the Internet by 2002. "I don't think this is the time for the federal Congress to rush into something that will have such a huge impact on state and local government," he said. Joining Voinovich to oppose the Internet tax bill were leaders from the National Association of Counties, National League of Cities and U.S. Conference of Mayors. Rep. Chris Cox, a Republican from California, and Sen. Ron Wyden, an Oregon Democrat, have sponsored similar bills that would bar any new taxes on computer transactions -- such as taxes on Internet access or online services -- for an unspecified time while Congress studies the whole issue. The bill would make an exception to the moratorium for income earned through an Internet service; local business license taxes, if the Internet provider is located within the appropriate jurisdiction; and sales or use taxes, so long as they are the same as charged for mail or telephone orders. "We would love to have the bill say what the sponsors say it says," said Brian J. O'Neill, a Philadelphia city councilman, representing the National League of Cities. But O'Neill and others say the technical language of the bill contains a broad pre-emption of state and local taxes. Wyden spokesman David Seldin strongly disagrees. "We have bent over backwards to clarify language of the bill so there can be no questions" that local governments retain authority to levy the same taxes on the Internet that are assessed on catalog sales, Seldin said. The bill seeks to halt new local taxes aimed specifically at Internet businesses. One National Governors' Association official said the bill's wording would worsen the states' problem of collecting sales taxes on catalog sales. "We know that we have to sit down with the industry and make the sales tax work on Main Street, on catalogs and on Internet, in some simplified, clear and technologically neutral way," said Tim Masanz of the association's economic development group. "If Congress goes on record and says that Internet sales are the equivalent of catalog mail-order sales, those talks are doomed," he added. "I can understand their desire to fight that battle but it would certainly not do much good to create a situation where you are favoring one at-home purchase over another," said Seldin. Copyright 1997 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. rule Related story: * House panels back Internet taxation bill - October 9, 1997 Related sites: Note: Pages will open in a new browser window * THOMAS - Legislative Information on the Internet + HR 1054 - Internet Tax Freedom Act * U.S. House of Representatives + Commerce Committee + Judiciary Committee * National Governors' Association * National League of Cities External sites are not endorsed by CNN Interactive. _________________________________________________________________ Infoseek search ____________________ ____ ____ _________________________________________________________________ rule Watch these shows on CNN for more sci-tech stories: CNN Computer Connection | Future Watch | Science & Technology Week rule Message Boards Sound off on our message boards You said it... [INLINE] IBM Active Channel for Microsoft Internet Explorer. Find out about your chance to win a computer click here for official rules and information. rule To the top © 1997 Cable News Network, Inc. All Rights Reserved. Terms under which this service is provided to you.