Wednesday, September 15, 1999

Read my lips: "No new taxes."

Governor Leavitt of Utah was emphatic and pushed hard with his points for a new policy regarding Internet taxation. The conversation was polite, structured and according to ceremony, but the gentlemen and two women present on the Advisory Commission on Electronic Commerce were passionate about their points.

Michael Moynihan of the Center For Strategic And International Studies ( told me he was pleased that his suggestion to have the event in NYC was followed. He wanted to reach out to the community and expressed thanks to Bill Rudin for hosting the event on Wednesday, September 15 (the first day was at the Millenium Hotel). He was also the administrative point person for getting the Internet Tax Freedom Act passed and is very excited about what's going on

Before the conversation centered on the scheduled issues, an audience member stood up to speak his peace. Peter McGeough, EVP of Seaman's Furniture Company and on behalf of the National Home Furnishings Association, stood up to state that they are not opposed to ecommerce, but ask for a level playing field. He cited how consumers are going into their stores, sitting on their furniture and then going online and purschasing the items over the Internet, thus avoiding taxes. He referenced an 8% differential tax that is unfair, from his point of view. Robert Novick (General Counsel, Office of the USTrade Representative (Delegate for Ambassador Charlene Barshefsky) asked if wouldn't shipping balance out tax costs? And offering a solution, Ron Kirk, Mayor of Dallas, Texas pointed out that Dallas is between New York and California, and would be a perfect mid-point for distribution needs.

Mr. McGeough's point was discussed a bit more and then the conversation headed into Grover Norquist, president, Americans for Tax Reform's resolution.
This called for the elimination of the 3% tax on telecommunications services and use, and it was passed. And Governor Leavitt's motion for a simpler system was passed for further definition. His call to action was to come back and tell him if this new system will work. "We should figure out if this is going to work….The world is watching what we're doing because we're the default leader in the Internet space." Leavitt feels the entire system is a mess and that we have an obligation to put something together and see if it works. We have a responsibility."

He decreed that the new system must have the following:
1. Is a radically simplified system
2. Has No New Taxes being passed on sales on the Internet
3. Removes the burden from the sellers
4. Doesn't compromise the privacy of purchasers
5. Acknowledges the role of States as sovereign taxing authorities
6. Treats purchasers as close to equal as possible
7. Has International scalability (David Pottruck, of Charles Schwab addtion)
8. Has no out of state prejudices (with audits or oversight) (David Pottruck, of Charles Schwab addtion)
9. Elimiates multiple odds
10. Is constitutional and not overrun American Indian's rights (Grover Norquist's addition)

David Pottruck, President & co-CEO, Charles Schwab Corp., rounded out the conversation with further requirements--that any organization can put together a plan, it not be more than 10 pages or so, when a plan gets the support of three or four commissioners it gets presented to all of them or they'll do nothing and each commissioner can not present more than two plans.

This resolution passed with relatively little argument and mostly carried discussions between Ron Kirk; David Pottruck; Gene Lebrun, President, National Conference of Commissioners on Uniform State Laws; Grover Norquist; Robert Novick; Theodore Waitt, Chairman of the Board and CEO of Gateway, added his support.

The day ended early so most of the Governors could get back to their respective states before the Hurricane came. And with agreements to fax and email amongst each other, the motions and discussions would continue in San Francisco.