WASHINGTON-National Association of Counties Executive Director Larry Naake said Virginia Gov. James Gilmore’s plan to permanently ban sales taxes on Internet transactions would be a short-sighted assault on local governments that would shift power to the federal government and unfairly favor Internet merchants at the expense of traditional retailers.
Gilmore, chairman of the Advisory Committee on Electronic Commerce created by Congress to study Internet taxes, also wants to convert the existing 3-percent federal excise tax on wireless and wireline telephone services to a 1-percent state sales tax.
Under the Gilmore proposal, the estimated annual $1.7 billion revenue would make up for the loss of revenue from forgone Internet taxes. At present, there is a moratorium on Internet taxes. A big trend in the wireless industry is the design of portable devices that can take advantage of electronic commerce and other Internet services.
“The fact remains that Gilmore’s proposal means county officials will be even more dependent on state and federal governments to fund their local services. This isn’t my idea of returning more control and authority to the local citizen,” said Naake. Virginia is home to many high-tech and Internet companies, including America Online.
