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Tuesday, May 30, 2000

Retailers press for end of Internet sales-tax ban

Also: Tiny increase in local sales tax rebate in May concerns city official

By Tara Copp
Caller-Times

Moore

The lack of an Internet sales tax is the top legislative concern of the Texas Retailers Association, said president Michael Moore.
   "Congress is dealing with this issue almost as we speak," Moore said. "We are working with the State Comptroller's office. I serve on an advisory committee that the comptroller wanted to deal with the whole e-commerce issue, but the big battle's in Washington."
   In 1998 Congress passed a moratorium on any new taxes on Internet sales, and the U.S. House of Representatives on May 10 extended that moratorium another five years. Under the previous moratorium, Texas was still able to collect taxes on Internet commerce because of a grandfather clause, but the new moratorium does away with the grandfather clause.
   The new moratorium encourages each state to adopt a universal taxing system, so that when Internet sales taxes are collected, the collectors won't trip over myriad local and regional sales tax differences.
   Sheila Clancy, spokeswoman for the comptroller's office, said the agency has a working group that's trying to bring all the stakeholders - bricks-and-mortar retailers and e-commerce businesses alike - together to create some recommendations for the Legislature in 2001.
   "Universal taxation might or might not be one of the recommendations," Clancy said.
   "Right now we estimate that Texas is forgoing $25 (million) to $50 million a year in state sales tax on e-commerce transactions and we estimate that's about $800 million in sales."
   But those numbers still pale in comparison to the amount lost to catalog sales, she said.
   "We currently estimate we're losing $200 million a year on catalog sales. So e-commerce is growing exponentially and it's obviously something to watch, but it's still a very, very small part of overall sales tax structure."
   Locally, Corpus Christi's sales tax rebates flat-lined in May, increasing only 0.02 percent to $3,182,575 in 2000 from $3,181,662 in May 1999.
   It's nothing new, and the trend is not unique among the city's economic indicators, said American Bank president Al Jones, chairman of the Corpus Christi Regional Economic Development Corp.
   "If you look at all the indicators, it's generally flat," Jones said. "The economy in Corpus Christi is not doing poorly, but its certainly not growing as much as other parts of the state and nation."
   Acting city budget director Rudy Garza said a few months ago in this column that his staff was being "cautiously optimistic" with its budget planning for the upcoming fiscal year, and earlier this year revised the city's estimated sales tax growth from $31 million to $30 million for 2000.
   "This particular rebate was a very low month," Garza said. "But by tracking the trends of the collections, we still believe we'll be able to meet the revised revenue estimates for the fiscal year."
   Revising estimated sales tax revenue downward is an experience that McAllen, San Antonio, Austin and others likely won't face.
   Garza said Corpus Christi's lack of growth deeply concerns the city staff. "That's a significant concern to all of us," he said. "We're not growing at the rate we should be. The council's made a commitment to have an impact here (with the November sales tax election that could give the Economic Development Corp. more money to attract new business.) Hopefully, the voters will agree."
  
  

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On Retailing is published every other Tuesday in the Caller-Times business section. The column includes news of new, relocated and expanded businesses in the Coastal Bend, plus retailing trends and profiles. Ideas may be submitted to: On Retailing, Corpus Christi Caller-Times, P.O. Box 9136, Corpus Christi, Texas 78469; e-mail Tara Copp at coppt@caller.com; fax items to (361) 886-3732; or call (361) 886-4316.

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