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CC Resolution No. 1419 2683 Resolution No. 1419 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, 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 BAYTOWN AND PRESERVATION OF THE LOCAL TAX BASE NEEDED TO DELIVER BASIC AND EXPECTED GOVERNMENT SERVICES AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 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 an C.�, ,.vim �� -� lty in collecting sales tax on purchases made from oul Q '; and WHEREAS, the grc ith which consumers can engage in remote sales; and WHEREAS, accorc and Technology Policy, between 1997 and 1998, rei �o to 39%; and WHEREAS, according to the Jupiter Communications, .,: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 preempts 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 2684 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 Baytown is a member of the National League of Cities, which 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, the following are some of the key messages guiding this campaign: ➢ State and local leaders strongly support technology advances and the opportunities offered by electronic commerce. At the same time, state and local leaders must protect local retailers from unfair competition and preserve tax bases needed to deliver basic and expected government services; and ➢ Charging sales tax for online purchases of traditional goods does not represent NEW taxes. A book purchased off a shelf at a local bookstore and a book purchased online are and should be subject to the same taxes. If a consumer buys two books online and no books at the local bookstore, the government has lost expected revenue from the sales tax; and WHEREAS, it is important that municipalities make their concerns known to our U.S. 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 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, US Conference of Mayors, National League of Cities, and International City/County Manager's Association entitled "Streamlined Sales Tax System for the 2 1" Century';NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: The City of Baytown 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 Baytown and preservation of the local tax base needed to deliver basic and expected government services. 2 2685 Section 2: The City of Baytown hereby opposes attempts by the United States Congress to enact further legislation that might pre-empt the authority of state and local governments. Section 3: The City 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 4: This resolution shall take effect immediately from and after its passage by the City Council of the City of Baytown, Texas. INTRODUCED, READ and PASSED, by the affirmative vote of the City Council of the City of Baytown this the 131" day of January, 2000. /,l'f e g4 i r tR-- PETE C. ALF RA Mayor ATTEST: EILEEN P. HALL, City Clerk APPROVED AS TO FORM: ACIO RAMIREZ, S ., C y Attorney c:klh220\C ityCouncil\Reso I ution\lntemetS alesTmResol ution 3