[BELLEVUE, Wash.] NoInternetTax.org, a leading grassroots opponent of Internet taxation and regulation, condemned
forty-two governors for signing a letter to Congress from the National Governor’s Association (NGA) urging them to
extend the current moratorium against Internet taxation only if it contains language to support the Streamlined
Sales Tax Project (SSTP). The moratorium, or Internet Freedom Act, will expire on October 21, 2001.
surface, SSTP seems to make sense by proposing to simplify the existing definitions, rules and tax rates levied by
more than 7,500 taxing entities across America,” stated Jennifer Holder, Executive Vice President of NoInternetTax.
“Scratch that surface and you’ll find that the measure violates consumer privacy and is wholly unconstitutional.”
The governors are seeking congressional approval to work on methods to overturn court decisions that forbid them to collect
sales taxes on interstate e-Commerce. President Bush supports a permanent moratorium against discretionary taxation of the
Internet and Internet access.
“We would be among the first to agree that our complex and archaic tax system is in
dire need of an overhaul,” continued Holder. “However, the NGA is merely hiding behind the guise of reform and fairness,
by attempting to kick down the door that will allow them to collect taxes on e-Commerce, thus imposing taxation on the
Under SSTP, the governors are proposing a “streamlined” system that flattens tax rates, resulting in a
de facto national sales tax and creates the national sales tax collection center. The collection center would be
responsible for monitoring and collecting consumer online shopping information, such as purchases, credit cards, names
and addresses. The center would use this compiled information to issue an Internet sales tax bill.
Supreme Court has ruled twice, most recently in 1992 in Quill v. North Dakota, that it is a violation of the Commerce
Clause for a state to force an out of state vendor to collect and remit taxes to a state where they have no physical
presence, or nexus. Currently, taxes apply to e-Commerce in the exact same manner as they do for catalog, television and
“Consumers should be alarmed that this will allow for the formation of a national database that
will monitor their personal information and shopping habits,” added Holder. “The National Governor’s Association should be
ashamed of themselves for using scare tactics to avoid discussing the real problems associated with SSTP.”
governors have alleged that they are losing their tax revenue base to their inability to tax e-Commerce, leaving social
programs, education, transportation and other core services in the lurch. These allegations are in conflict with data
released by the CATO Institute who reported that sales tax revenues to the states increased by 7.3% last year.
General Accounting Office (GAO) has also reported to Congress that not a single entity has been able to demonstrate lost sales
tax revenues to e-Commerce.
“Regardless of what they’re calling it—streamlining or leveling the playing field,”
concluded Holder, “It all adds up to yet another route for the government to impose a tax and grow government.”
About NoInternetTax.org: Based in Bellevue, Wash., NoInternetTax.org is a nonpartisan education and advocacy organization.
The mission of the organization is to protect the Internet on the state, national and international level from burdensome
regulation and taxation. For more information, please visit our Web site at: www.NoInternetTax.org.