Office of Governor Gary Locke
FOR IMMEDIATE RELEASE - February 23, 2000
Contact:  Governor's Communications Office, 360-902-4136

Simplification best solution to e-commerce taxation

OLYMPIA — The federal debate over the taxation of cyberspace can be best resolved by simplifying state sales and telecommunications tax systems to accommodate the new economy of the 21st century, Gov. Gary Locke said today.

Locke is a member of the Advisory Commission on Electronic Commerce (ACEC), created under the Internet Tax Freedom Act in 1998. Congress asked the 19-member panel of government and private industry representatives to study tax issues related to e-commerce and make recommendations by April 2000.

Locke is one of several commissioners who submitted proposals that would encourage states and businesses to work together to radically simplify tax systems to ease the tax-collection burden on all sellers. The proposal will be considered at a commission meeting in Dallas, Texas next month.

"Clearly, a sales tax system that was developed in the 1930s, before we had computers —much less the Internet — is now woefully outdated," Locke said. "We need to work with business to update those systems for the 21st century so electronic commerce can continue to thrive without incurring undue tax administration burdens."

Locke said he opposes any new taxes on the Internet. The proposal extends the current moratorium on the imposition of new state and local taxes. It also calls on the U.S. government to continue its pursuit on an international moratorium on tariffs of electronic transmissions and proposes industry and government cooperation in simplifying telecommunication taxes.

Locke said states without an income tax, such as Washington, are highly dependent on sales tax revenues to provide education and other essential services. Any solution needs to promote fairness by creating a simplified sales tax system in which the disparate tax treatment of different types of sellers can be eliminated, he said.

"It's clear that the sales tax system needs an overhaul if it is going to survive into the new millennium," Locke said. "This is a constructive proposal intended to promote a constructive dialog about these issues when the Advisory Commission meets next month in Dallas."

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