PRESS RELEASE August 24, 2001

TALLAHASSEE - The growth of e-commerce poses a serious threat to state sales tax revenues across the nation, but Florida is particularly vulnerable, according to a special report issued today by Florida TaxWatch.

"Recent developments in the economy, in information technology, and in tax jurisprudence are converging to open great holes in the sales and use tax bases of all states," said Dominic M. Calabro, President of Florida TaxWatch. "Because Florida relies on sales taxes for 73% of its general revenue, the equation is simple - no collection of sales tax on the Internet means less money for new schools, teacher salaries or textbooks. Florida has taken an important first step toward tax reform by joining the Streamlined Sales Tax Project, a multi-state effort to examine the problems posed by e-commerce, and work toward solutions."

Currently, "remote sellers" are not required to collect and remit state sales and use taxes from their customers. Congress has the power to change that, but there is strong opposition from businesses that contend collecting and remitting the state's sales and uses taxes is too burdensome. Senator Bob Graham is co-sponsor of Senate Bill 512 which would, among other things, authorize the states to enter into an Interstate Sales and Use Tax Compact, and authorize any state that has adopted the system described in the Compact to require sellers to collect and remit sales and use taxes on remote sales to purchasers located in those states. The Simplified Sales and Use Tax Administration Act passed and signed into law this year by Governor Jeb Bush makes Florida part of the Streamlined Sales Tax Project. The group is looking at ways to use modern technology to ease the collection of sales and use taxes.

"Freeing Internet sellers from collecting sales tax not only erodes the tax base but also creates an unfair advantage over the bricks-and-mortar retailers on every street corner in Florida," Calabro said. "Government must do its part to facilitate a sales and use tax system that is transparent and as easy as ABC to taxpayers, or it simply won't happen. If Floridians wish to maintain the taxes we prefer and avoid taxes we don't want, such as a state personal income tax or state property tax, we must make our system work."

The full report is authored by Miami-based attorney and Florida TaxWatch Board Member, Richard H. Hunt, working closely with Florida TaxWatch staff. The next Special Report in this series will focus on the activities and achievements of the Streamlined Sales Tax Project and related developments in Congress.