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E-Taxes: States and Counties Say "Ring 'Em Up" They're set to unveil their own plan. It's not perfect, but it's better than anything the no-taxers have proposed so far The Advisory Commission on Electronic Commerce -- a.k.a., the Internet tax commission -- is out of money and out of friends. Pretty soon, it may be out a mandate. On Nov. 16, groups representing governors, county officials, and state legislators are effectively going to bid the panel adios. They'll announce a plan that is intended to allow states to collect sales taxes on Internet transactions -- commission or no commission. Governors, including Michigan's John Engler and the plan's godfather, Mike Leavitt of Utah, are prepared to press their legislatures to adopt the plan as soon as next January. ANY VOLUNTEERS? The idea, developed by the National Governors Assn., is to designate an as-yet-unnamed private third party to calculate, collect, and remit taxes on both mail-order and online sales. Taxes will be owed based on the delivery address of the buyer. Participation by states and retailers would, at first, be voluntary. The NGA plan is not without flaws. Such a destination-based system may be fine for a personal computer that is shipped by FedEx. But it won't work for goods and services that are downloaded to an e-mail address. The proposal also raises important privacy issues. While the NGA plan acknowledges the need to protect consumers, a third-party clearinghouse will be yet one more organization with access to information that buyers might prefer to keep private. The plan's voluntary nature also raises questions. Certain big e-tailers that have stores or factories in multiple states, such as Office Depot, probably will participate in the program. But others, such as L.L. Bean -- which carefully avoids establishing a legal presence in states other than Maine -- won't. And this means Bean will, at least for a while, still enjoy a price advantage over both Main Street retailers and even some online competitors. MIGHTY MITES. Critics, including a growing list of congressional lawmakers and conservative antitax groups, think they can get Washington to block states from enacting the NGA plan. Despite their plan's drawbacks, at least the governors' proposal is more cogent than the virulent antitaxers. These critics seem to be arguing two contradictory points simultaneously. First, they say states should not worry about taxing e-commerce because it is such an insignificant commercial force that taxing it would generate a paltry sum of money. At the same time, they insist that online selling is the future of American commerce, and taxing it would impose such a burden that e-tailing would wither and die. Here's the great irony. If the antitaxers ultimately win the political debate, it won't be based on the force of their intellectual argument. Instead, it will result from the enormous political clout already being wielded by the very e-tailers that claim to need nurturing as an infant industry. Babes in the woods? Hardly. The antitaxers may have the political muscle, but the governors have the best policy argument. Gleckman, senior correspondent in BW's Washington bureau, offers his views on Mondays for BW Online EDITED BY DOUGLAS HARBRECHT _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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