Internet Sales Tax Topic Dominates FAIR Meeting.(Finance, Administration and Intergovernmental Relations)(Brief Article)

Internet taxation led the agenda of NLC's Finance, Administration and Intergovernmental Relations (FAIR) Steering Committee during its meeting June 4-5 in Pembroke Pines, Fla.

Committee Chair Joseph Brooks, a councilmember from Richmond, Va. reviewed the work of the Electronic Commerce panel of the National Tax Association on which he serves as one of two NLC representatives.

Estimates of revenue loss in different cities and states were discussed as well as the study commission created by the Internet Tax Freedom Act. The subject was broadened to allow a look at the more general issue of tax base erosion.

In the two other priority areas selected by the FAIR Policy Committee in March: national debt management and Social Security, the committee agreed that current policies on these subjects are sufficient. At this point the committee will not be bringing major policy amendments back for action to the membership in December on these two subjects.

Issues related to taxation and regulatory immunity by tribal governments also resulted in lengthy discussions. The committee was briefed on new regulations proposed by the Department of Interior to improve notification and participation procedures for local governments when tribes or tribal members apply to have land placed into trust status. Trust status is of concern to cities because once land is placed in trust it is immune to any state and local regulatory control or taxation. Comments on the regulatory proposal are due in July and the committee was briefed on NLC's intended comments.

The second subject was a legislative proposal to compel tribes to collect and remit sales and excise taxes (such as cigarettes and gasoline). The committee saw this as an important issue with some shared characteristics with the Internet tax issue, but asked for additional information on the subject before they felt comfortable in issuing specific policy recommendation. The committee will be communicating with the NLC Board about the importance they attach to the issue while raising some of the concerns that they will be studying prior to the Congress of Cities.

The committee also began a discussion on federal preemption of municipal regulatory authority on the subject of gambling cruise ship docking. This was a subject raised by Mayor Bruce Tobey of Gloucester, Massachussets at the FAIR Policy Committee meeting at the 1998 Congress of Cities in Kansas City. The committee promised to review this subject during 1999 and began that review at this meeting.

The consensus of the committee was to avoid discussion of the pro and cons of gambling but indicated an interest in this subject as an issue of federal preemption. The committee raised a number of questions they wish answered at their fall meeting at which the committee will consider drafting a policy recommendation on this subject.

The Clinton Administration has proposed a new type of federal. security, Better America Bends, which would allow municipalities to apply, through a competitive process, to acquire open space or recycle brownfields. If the application was approved the municipality could issue a bond to be repaid over 15 years. The unique feature of this borrowing would be that rather than the municipality paying interest on the bond, investors would receive tax credits directly from the federal government.