Washington, D.C. - U.S. Senator Mike Enzi, R-Wyo., led the fight to defeat an amendment that could have damaged main street businesses and cut off sales tax revenue vital to Wyoming and other states' schools and municipalities.
The Senate voted 88-11 against an amendment to the Senate tax relief package. The amendment was offered by Sen. Bob Smith, R-N.H.
"If your state, your cities, your towns, your counties have a sales tax then you should be desperately interested in this amendment. They would not feel that it was appropriate to pass a second-degree amendment that would preclude them from having any opportunity to continue collecting the revenue that they're counting on for their schools and other forms of government," Enzi told senators late last night.
The Smith amendment would permanently set in place the prohibition of charging sales tax on items sold over the Internet. Enzi wants to preserve free access to the Internet, but he also believes a fair system of sales tax collection must be put into place. Enzi believes that if the Smith amendment would have passed, negotiations on a bipartisan compromise bill addressing these issues would have been derailed.
Enzi along with Sen. Byron Dorgan, D-N.D. and a bipartisan coalition of other members of Congress, local and state government officials, direct marketers, retailers and others have been working for almost a year on a plan that would preserve free access to the Internet and help ensure equal taxation on sales made over the Internet with those products bought in local stores.
Enzi, Dorgan and others introduced the Internet Tax Moratorium and Equity Act, S. 512 March 8 to address the issue.
"I do not support a tax on the use of the Internet itself. I do, however, have concerns about using the Internet as a sales tax loophole. Sales taxes go directly to state and local governments and I am very leery of any federal legislation that bypasses their traditional ability to raise revenue to perform needed services such as school funding, road repair and law enforcement," Enzi said when he introduced his bill. "While those who advocate a permanent loophole on the collection of a sales tax over the Internet claim to represent the principles of tax reduction, they are actually advocating a tax increase. Simply put, if Congress continues to allow sales over the Internet to go untaxed and electronic commerce continues to grow as predicted, revenues to state and local governments will fall and property taxes will have to be increased to offset lost revenue or states who do not have or believe in state income taxes will be forced to start one."
The Senate continues to debate and to offer amendments to the Senate tax relief measure today.