WASHINGTON, DC – Rep. Bill Delahunt today joined with bipartisan House and Senate colleagues in introducing legislation to equalize the treatment of transactions subject to state sales and use taxes, regardless of whether the transaction takes place through local “brick and mortar” businesses or through remote (online or catalog) sellers.

“By allowing the states to collect the tens of billions they are owed in unpaid taxes on remote sales, our bill will level the playing field for the thousands of main street businesses that sustain our economy, and will provide relief to states that are facing drastic cuts in essential public services,” Delahunt said.

Joining Delahunt in introducing the bill were Senators Mike Enzi (R-WY) and Byron Dorgan (D-ND) and Congressman Ernest Istook (R-OK).

The legislation gives congressional approval to a national compact negotiated among state governments, which streamlines and simplifies more than 7,500 diverse sales tax laws among state and local governments. Under the bill, states that agree to the simplification could require remote sellers to collect and remit sales and use taxes. The bill would not increase taxes or permit taxation of the same transaction by more than one state.

To date, 34 states have agreed to enter into the compact, and 20 states have already passed implementing legislation. Under the bill, these states would be permitted to enforce sales tax laws on merchants who ship goods into their state and have over $5-million in gross annual sales. The legislation also requires states to compensate retailers for their costs in collecting sales taxes.

The bill is supported by a large coalition of national retailers, merchants and e-commerce businesses as well as the E-Fairness Coalition, the National Governors Association, the National League of Cities, National Council of State Legislators, National Association of County Officials, National Association of Real Estate Investment Trusts, International Council of Shopping Centers, the National Retail Federation, and the International Mass Retail Association.

A copy of Congressman Delahunt’s remarks follow:

I am pleased to join with Senators Dorgan and Enzi, and Congressman Istook, in introducing this important bill.

By allowing the states to collect the tens of billions they are owed in unpaid taxes on remote sales, our bill will level the playing field for the thousands of main street businesses that sustain our economy. And will provide relief to states that are facing drastic cuts in essential public services.

Brick and mortar businesses–and the communities that depend on them–cannot continue to bear an unfair sales tax burden from which their on-line competitors are effectively exempt.

And states that are confronting their worst fiscal crisis since the Great Depression cannot continue to forego billions in sales tax revenues—at the very time when a declining economy, spiraling Medicaid costs, and the erosion of their tax base have left them with a collective deficit of some $100 billion.

Governors of both political parties face a stark choice between unpopular tax increases and drastic cuts in Medicaid, education, public safety and other essential services. Or both. With no relief in sight, states are curtailing health care for the poor and mentally ill. Laying off teachers. Dismissing state troopers. Closing parks and libraries. Shortening the school year. Eliminating college programs. And slashing other services that have long been taken for granted.

Uncollected sales taxes on Internet purchases cost the states more than $16 billion in 2001. Unless there is a system in place that enables state and local governments to collect these taxes, their annual losses from on-line sales will grow to $45 billion by 2006, and $66 billion by 2011—with total losses coming to nearly half a trillion dollars by that date.

The states have made substantial progress over the past year in developing a simplified, efficient and “technology-neutral” system for the taxation of goods and services. Once a sufficient number of states have implemented the Streamlined Sales and Use Tax Agreement, Congress should move expeditiously to consider our legislation authorizing them to require remote sellers to collect and remit sales and use taxes on in-state sales.

The states are meeting their responsibilities. It’s time for us to meet ours.

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