INTERNET TAX VITAL TO LOCAL TAXPAYERS

I have written or spoken about the taxing of consumable goods over the Internet many times. I have been referred to as Scrooge, a taxing bigot, a money-hungry politician and other derogatory names. That's all right with me, because I believe you and Main Street businesses are being duped by Big Business.

Here is an example of what I mean:

You purchase a $500 size-46 suit over the Internet. You give the Internet company your credit-card number. The company sends you the size-46 suit just like you ordered. The company doesn't charge you sales tax, but it charges you 10 percent for shipping and handling, or $50. The suit doesn't fit, so you want to send it back. You contact the company over phone, and after pushing a lot of buttons you finally reach a live person who informs you that you can send back the suit at your expense, and the company will see what can be done about your problem. You may never get your suit or your money back.

You could buy this same $500 suit at your local clothing business and pay a maximum of $38.75 in sales tax, which supports your city and county. If the suit didn't fit, the local clothing business would sell you a size that does fit. And the store would take care of any other problems.

So which is the better buy?

It is a fact that many cities and counties count on sales taxes as the only means of support for their operations. Cape Girardeau County is one of those counties. We have a one-half percent county sales tax. This generates enough funds, coupled with fees, so that there is no county tax on real or personal property for the operation of the county's business. There has been no county property tax since 1982, because of the county sales tax. I think I speak for the county commissioners as well as myself in saying we believe the sales tax is much fairer than taxing your property.

Now we have 30 days before Congress has to make a decision on never taxing retail goods bought over the Internet, placing another moratorium for five years on Internet sales taxes, or giving cities and counties another year to settle the problem of what to tax and not to tax on the Internet.

Eighteen states have agreed on a solution, and 12 more states are getting close to joining them. Missouri is one of the 12. But the powers behind never taxing Internet sales are strong, and they have the finances to get this passed. Your county's future and your city's future are in the hands of those whom the people of Missouri and the other 49 states have elected to serve all the people.

Let me explain how we got to where we are now.

In 1998, when the age of technology really began to expand, Congress in all its wisdom felt that this fledgling Internet operation needed protection against a rush for everyone to tax Internet sales. This was probably a good thing, but Congress appointed a committee to study this matter. As a result, there was a three-year moratorium placed on taxing Internet sales.

Congress appointed a 19-member committee and said at least 75 percent of the committee must agree before Congress would accept the committee's report. Look who was put on the committee. The chair was Gov. James Gilmore of Virginia, a known backer of no taxation on anything. Other members included high officials from AT&T, Time Warner, America Online, Charles Schwab, MCI and Gateway. Another member was a consultant for the Association of Interactive Media. Other members were the general counsels for the Department of Commerce and the U.S. Trade Department. Other members were a representative from Americans for Tax Reform, a delegate from the Virginia House of Delegates, a member of the California Board of Equalization and a representative from the secretary of the treasury.

After much squabbling and a threat to sue, Congress appointed a commissioner, a mayor, a representative from the National Conference of Commissioners on Uniform State Laws and two other governors.

In the meantime, the study committee added the concept of not taxing retail products purchased over the Internet, which was not part of the committee's original charge. The committee did not have 75 percent agreement at the time its findings were due, so the committee should not have reported. But those against the Internet tax were in the majority, and Congress allowed the report.

There was much discussion before and after the presidential election about the problem of Internet sales, but it was placed on the back burner. It is only being brought up now because the three-year moratorium on Internet sales taxes runs out in October.

The news media have reported that there is a California company that wants to contract with large retailers to sell their goods over the Internet. If I understand the concept correctly, you could go into a store to try on a suit, making sure it fits. Then you could walk out of the store and order the suit from an Internet kiosk, pay no taxes and go back inside the store to pick up the suit. If this happens, the genie is out of the bottle and can never be put back. Sales without taxation would go up, and the taxes to run various forms of government would go down.

If we still want the services and everything else offered by counties and cities, then financing would have to come from another avenue: property taxes.

Remember, the sales tax the Internet does not want to collect is really your money. It just passes through the Internet companies' hands. I would recommend that any of you who feel the way I do should write or call your U.S. representative or senator and get the stopper in the bottle before that genie escapes.

H. Weldon Macke is the Cape Girardeau County auditor.