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154. RESOLUTION 2000- 109t A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN MARCOS, TEXAS EXPRESSING OPPOSITION TO FEDERAL LEGISLATION TO EXTEND THE MORATORIUM ON TAXATION OF INTERNET SALES TRANSACTIONS; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the use of new commUllications technologies, including the Internet, as a way to conduct sales of goods and services is accelerating; and WHEREAS, out-of-state vendors who conduct sales via the Internet, mail order, and phone, under many circumstances, are not required by law to collect existing sales and use taxes imposed by state and local governments in which the purchaser resides; and WHEREAS, the primary barrier to collecting taxes on remote sales is the Supreme Court's ruling in Quill v. North Dakota which defers to Congress, and only Congress, to authorize states to require remote vendors to collect taxes in a manner that does not unduly burden interstate commerce; and WHEREAS, current laws create a competitive disadvantage and great inequities between merchants who sell from traditional "brick and-mortar" establishments and those who sell from electronic stores; and WHEREAS, this migration of sales to the Internet is restricting the ability of state and local governments and school districts to collect taxes which finance essential public services including but not limited to police, fire, emergency medical service, education, social services, infrastructure development, and local healthcare; and WHEREAS, the United States Constitution reserves for the states the right to collect and impose taxes; and WHEREAS, 45 states and the District of Columbia collect over 40 percent of overall revenue from sales taxes to fund vital public services; and WHEREAS, a recent University of Tennessee study estimates that state sales tax revenue losses in 2003 will exceed $10 billion; and WHEREAS, the City of San Marcos could suffer a significant loss of revenue, and a corresponding significant reduction in essential public services, from an extension of the current federal moratorium on taxation of Internet sales transactions; and WHEREAS, the Advisory Commission on Electronic Commerce, established by the Internet Tax Freedom Act, failed to address, in a fair and equitable manner, the growing volume of tax-free sales transactions occurring over the Internet, which have put "brick-and-mortar" stores at a competitive disadvantage; and WHEREAS, the Commission's report to Congress does not effectively address the tax losses state and local governments will experience if the Internet becomes a permanently tax-free retail market. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN MARCOS,TEXAS: PART 1. That the City of San Marcos opposes any Congressional action to implement the Advisory Commission on Electronic Commerce's report proposals that would preempt state and local sovereignty, guaranteed by the 10th Amendment of the United States Constitution. PART 2. That the City of San Marcos supports simplification of state and local sales taxes, and urges states to move expeditiously to craft and approve model legislation.