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[FYI] Florida Fights to Collect Cyber Taxes


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Florida Fights to Collect Cyber Taxes  

State faces the loss of $1 billion a year in revenue as Web shopping 

By Alina Matas 

Miami Daily Business Review January 21, 2000  

A month ago, Florida Sen. Jim Horne requested a presentation to his 
Fiscal Resource Committee from the state Revenue Department. He 
recalls how, across the screen, the presenter flashed current 
forecasts of the growth of sales via the Internet.  

One number in particular got the legislator's attention: Florida 
stands to lose $1 billion a year in sales-tax revenues by 2002 
because of transactions over the Internet that, under existing rules, 
are exempt from taxation.  

"It's an issue that we need to come to grips with," says Horne, a 
Republican from Jacksonville. "Our state revenues are solely 
dependent on transaction tax. If that base erodes, it would cause 
more problems in the state of Florida than in other states."  

Horne's solution: "You need to have a system for (Internet) 
transactional-tax collection and remittance. And ultimately it takes 
the federal government to police the system."  

Such proposals have sparked a national debate about taxation and how 
to deal with the Internet's increasing role in retail sales, with 
Florida among the states that stand to be most affected. In part 
because of Florida's lack of a state income tax, the bulk of the 
state's budget -- 72 percent of its roughly $18 billion general 
revenue fund -- comes from the 6 percent tax consumers pay on most 
items they buy for personal use.  


Midway through the fiscal year that ends June 30, the state is on 
track to collect its projected $14.8 billion in annual sales taxes. 
(Last year, it collected $14.5 billion.) Further, opponents of a 
centralized sales-tax system point out that telecommunications, the 
backbone of the Internet, already is heavily taxed. And they fear 
that creating a centralized sales-tax system to derive revenue from 
Internet transactions would thwart its power as an economic engine.  

"America does not have a competitive advantage with other countries 
when it comes to things such as stitching Beanie Babies," Nehring 
says. "But America does have a competitive advantage when it comes to 
information technology. Why would we want to handicap that?"  

But, says Rustin, of the Florida Retail Federation, "I don't think 
over time Congress will be able to withstand the pressure from the 
states to tax Internet sales."  

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