HomeMy WebLinkAboutRES 3452CITY OF RENTON, WASHINGTON
RESOLUTION NO. 3452
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RENTON,
WASHINGTON, URGING SIMPLIFICATION AND FAIRNESS IN THE
APPLICATION OF SALES AND USE TAXES.
WHEREAS, under current law, local retailers in the City of Renton are required to
collect sales and use taxes on transactions regardless of whether they are conducted over the
counter, over the Internet, telephone, or by mail order, while out-of-state or remote sellers are
under no such obligation; and
WHEREAS, the primary barrier to collecting taxes on remote sales is the Supreme
Court's 1967 ruling in National Bellas Hess, Inc. v. Illinois, which prohibits state and local
governments from imposing a duty to collect on remote sellers in part because it would be overly
burdensome and too costly to require them to figure out and remit sales taxes to thousands of
different state and local governments that have different tax rates and other requirements; and
WHEREAS, the Supreme Court reaffirmed the Bellas Hess decision in 1992 in its ruling
in Quill Corp. v. North Dakota but clarified that Congress may authorize state and local
governments to require remote sellers to collect their taxes in a manner that does not unduly
burden interstate commerce; and
WHEREAS, both Supreme Court decisions pre-date the Internet which has been the
engine driving the explosive growth in electronic commerce. Business to consumer sales alone
in this area are expected to surpass $184 billion nationally by 2004; and
WHEREAS, current law has created an un-level playing field between local retailers and
remote sellers, one in which remote sellers who sell products over the Internet tax-free have a
competitive advantage over our local retailers, who are required by law to collect our sales taxes
on over-the-counter sales; and
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RESOLUTION NO. 3452
WHEREAS, the City of Renton has a local option sales tax which is a significant
revenue source and depends on the state for funds derived from the sales tax which, together,
support a number of vital public services such as police, fire protection and transportation; and
WHEREAS, the Advisory Commission on Electronic Commerce (ACEC) failed to reach
the consensus required by law in developing recommendations to submit to Congress on whether
and how sales taxes should be applied to electronic commerce and remote sales; and
WHEREAS, in spite of the ACEC's failure to reach legitimate consensus, the
Commission submitted recommendations to Congress calling for the elimination of the local
option sales tax on remote sales and numerous exemptions and tax loopholes that would cost
state and local governments an estimated $30 billion annually; and
WHEREAS, local and state governments across the nation acknowledge that their sales
and use tax systems are too complex and burdensome for electronic commerce and remote sales,
and they are working cooperatively to adopt model legislation to radically simplify their tax
systems for the 21st century so they can be easily applied to all commerce; and
WHEREAS, numerous proposals have been introduced in Congress to implement some
of the recommendations in the ACEC report, and the House Speaker and Senate Majority Leader
have stated their intentions to approve legislation this year extending the current 3-year
moratorium on new taxes on Internet access fees, multiple and discriminatory taxes for an
additional 5 years; and
WHEREAS, there is no compelling need to extend the moratorium at this time since it is
not scheduled to expire until October 2001, and since the legislation endorsed by the
congressional leadership neither addresses the competitive disadvantage issue for local retailers
nor the collection of taxes on remote sales for state and local governments, which are the two
most dominant issues in this debate;
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RESOLUTION NO. 3452
NOW, THEREFORE, BE IT RESOLVED that the City of Renton supports the
simplification of state and local sales and use taxes, and urges states to move expeditiously to
develop and approve model simplification legislation that allows state and local sales and use
taxes to be applied equitably to traditional retail and remote sales; and
BE IT FURTHER RESOLVED that Congress is urged to ignore the report and
recommendations of the Advisory Commission on Electronic Commerce, and not to consider
legislation simply extending the current moratorium; and
BE IT FURTHER RESOLVED that Congress is strongly urged to approve legislation
which provides that once a state successfully implements sales tax simplification, it will trigger
Congressional authorization granting that state the authority to require remote sellers to collect
its state and local use taxes.
PASSED BY THE CITY COUNCIL this 24thday of April , 2000.
APPROVED BY THE MAYOR this 24thday of April 2000.
Lawrence J. Warren, City Attorney
RES.792:04/23/00:as.
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