HomeMy WebLinkAboutRES 2000-001 RESOLUTION NO. 2000-01
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS, SUPPORTING THE REASONABLE
APPLICATION OF SALES TAX ON APPLICABLE
PRODUCTS AND SERVICES PURCHASED THROUGH
ELECTRONIC COMMERCE, TO ENSURE EQUITABLE
TREATMENT OF RETAILERS PHYSICALLY LOCATED IN
GRAPEVINE AND PRESERVATION OF THE LOCAL TAX
BASE NEEDED TO DELIVER BASIC AND EXPECTED
GOVERNMENT SERVICES; AND PROVIDING AN
EFFECTIVE DATE
WHEREAS, state and local governments rely on sales tax revenues to pay for
public services related to public safety, education, infrastructure maintenance, social
programs and other quality of life services; and
WHEREAS, nationwide, sales tax comprises nearly half of the tax revenues
collected by states and distributed to local governments; and
WHEREAS, state and local governments have experienced difficulty in collecting
sales tax on purchases made from out-of-state businesses, known as remote sellers;
and
WHEREAS, the growth of the Internet has increased the ease with which
consumers can engage in remote sales; and
WHEREAS, between 1997 and 1998 retailers selling on the Internet tripled from
12% to 39%; and
WHEREAS, 93.5% of e-commerce transactions are expected to come from
traditional business and retail sources by 2002; and
WHEREAS, the U. S. Congress enacted the Internet Tax Freedom Act of 1998
which pre-empts state and local authority by establishing a three year moratorium on
the imposition of e-commerce related taxation, and created an Advisory Commission on
Electronic Commerce charged with making recommendations for future Congressional
action; and
WHEREAS, the Internet Tax Freedom Act discriminates against citizens without
Internet access because these individuals will continue to be obligated to pay sales tax
on purchases from local stores, while consumers with the means to afford the
necessary technology for making Internet purchases will not be required to pay sales
tax; and
WHEREAS, retailers engaging in e-commerce will experience an unfair
competitive advantage over local, "Main Street", or "bricks and mortar" businesses if the
Internet Tax Freedom Act is made permanent; and
WHEREAS, the National Governor's Association estimates that state and local
government revenues from sales tax could decrease by as much as 20% by 2003 if the
Internet Tax Freedom Act is made permanent; and
WHEREAS, the City of Grapevine is a member of the National League of Cities
(NLC), and the National League of Cities is launching a multi-year education and
advocacy effort to increase understanding of the electronic marketplace and develop
public policy recommendations that will help shape the debate at the end of the three-
year moratorium on taxing online transactions; and
WHEREAS, there are three key messages guiding this campaign:
(a) The opportunities offered by electronic commerce. At the same time, we
must protect local retailers from unfair competition and preserve tax bases
needed to deliver basic and expected government services.
(b) Charging sales tax for online purchases of traditional goods does not
represent NEW taxes. A book purchased off a shelf at Barnes & Noble and a
book purchased online through Amazon.com are and should be subject to the
same taxes. If a consumer buys two books at Amazon.com and no books at the
local Barnes & Noble, the government has lost expected revenue from the sales
tax.
(c) Convenience, not tax avoidance, is what lures consumers to online
purchasing. In fact, many don't know whether they pay any sales tax when they
buy online or under what circumstances they would pay local/state sales tax.
Therefore, it is safe to assume that charging sales tax for traditional purchases
will not stymie the growth of this new marketplace. Moreover, it is absolutely
clear that state and local taxes have in no way restricted the phenomenal growth
of the nation's leading e-commerce companies like Microsoft, Intel and others.
Federal legislation should not create a protected class of taxpayers at the
expense of Main Street and other taxpayers; and
WHEREAS, it is important that cities make their concerns known to our United
States senators and congressmen, state legislators, governor and lieutenant governor;
and
WHEREAS, local elected officials have a unique opportunity and duty to educate
citizens, business leaders and key stakeholders about the risk that the dramatic growth
of tax-free online shopping poses to local revenue bases; and
RES. NO. 2000-01 2
WHEREAS, the Advisory Commission on Electronic Commerce will consider
proposals to address e-commerce related taxation issues, including one jointly
submitted by the National Governors' Association, Council of State Governments,
National Conference of State Legislators, National Association of Counties, U.S.
Conference of Mayors, National League of Cities, and International City/County
Manager's Association entitled "Streamlined Sales Tax System for the 21st Century".
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS:
Section 1. That all premises stated in the preamble to this resolution are
incorporated herein as if copied in their entirety.
Section 2. That the City of Grapevine does hereby support the reasonable
application of sales tax on applicable products and services purchased through
electronic commerce to ensure equitable treatment of retailers physically located in
Grapevine and preservation of the local tax base needed to deliver basic and expected
government services.
Section 3. That the City of Grapevine hereby opposes attempts by the United
States Congress to enact further legislation that might preempt the authority of state
and local governments.
Section 4. That the City of Grapevine will participate in educational and
advocacy efforts as outlined by the National League of Cities and will communicate with
national, state and local officials regarding this important issue.
Section 5. That this resolution shall become effective from and after the date
of its passage.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 4th day of January, 2000.
APPROVED:
William D. Tate
Mayor
RES. NO. 2000-01 3
ATTEST:
Linda Huff
City Secretary
APPROVED AS TO FORM:
John F. Boyle, Jr.
City Attorney
RES. NO. 2000-01 4