On Wednesday, March 10, in a speech before the National Conference of State Legislators (NCSL), at the Washington Court Hotel in Washington, D.C., Senator Michael Enzi (R-WY) called on NCSL members to support the Streamlined Sales & Use Tax Act (SSUTA, S. 1736). Enzi and Senator Byron Dorgan (D-ND) introduced the bill, which would ensure that the tax system is fair to Main Street businesses, in the Senate in October 2003.
"The tax system should be simplified so that the same rules apply to everyone, whether they sell their merchandise from a storefront, over the phone, through a catalog, or on the Internet," Enzi said. "Because mail-order and Internet companies don't have to collect and remit sales taxes like brick-and-mortar companies do under current law, Main Street businesses are at a competitive disadvantage due to the appearance of higher prices."
S. 1736 would streamline the country's more than 7,500 diverse sales tax jurisdictions by allowing states that become voluntary members of a national compact to require remote sellers to collect and remit sales and use taxes. The national compact was made last year by 34 states and the District of Columbia and is also called SSUTA; it outlines a comprehensive system to simplify the states' sales tax rules and to dramatically reduce red tape for America's businesses. States that do not simplify their sales and use tax system for all sales do not have the authority to collect tax on remote sales.
Furthermore, states that do not choose to become members of the compact would not be required to make any modifications to their tax systems, but would have the opportunity to join the compact and implement the simplification requirements at any time.
In his speech, Enzi said, "This week the Senate is debating the Senate Budget Resolution for fiscal year 2005. The introduction of the Resolution has intensified the debate on our national funding priorities and the mechanisms by which we control spending. The introduction and subsequent debate has also reminded me why I spent 10 years in the Wyoming legislature rather than the U.S. Senate. Unlike the federal government, state legislatures are held accountable for every single penny. Budgets are too tight to be reckless or excessive. Although we are doing our best to rein in spending this year, it is difficult to get your hands around a trillion-dollar budget.
"I know many of your states are facing some of the largest deficits in recent memory. Much of this can be attributed to the downturn in the economy and increased demands imposed by federal legislation. Another huge factor has been the explosion of sales over the Internet and the subsequent decline in sales tax revenues. That's why my colleagues and I introduced [SSUTA]
Enzi explained that S. 1736 is not a "disguised attempt" to raise taxes or to put a new tax on the Internet. "Consumers are already required to pay sales and use taxes for purchases made over the phone, by mail, or via the Internet," he said. "Unfortunately, states can't enforce these user taxes very easily. Our bill would actually help consumers, businesses, and states by relieving consumers of their remittance burden, simplifying the entire sales tax system for all sellers and putting the lost tax revenue back into the state coffers."
S. 1736 would also provide a mechanism that would allow states to systematically and fairly collect the taxes already owed to them, Enzi said. And he stressed that S. 1736 will make it "easier for American consumers and businesses to conduct sales from remote locations, while also helping states to begin recovering from years of budgetary shortfalls .
We can help you address this problem, but only if you let your Congressional members know how important it is."
To read Enzi's speech in its entirety, click here.