For Immediate Release
April 6, 2000
Contact: Gwenda Bond or Rusty Cheuvront (502)564-2611

Governor Patton Urges Congress to Reject E-Commerce Report

Washington, D.C. – At a news conference with other governors, and community and business leaders, Governor Paul Patton urged Congress to reject a report of the Congressional Advisory Commission on Electronic Commerce containing recommendations that would bar states from collecting existing sales tax from e-merchants and on some products sold by brick-and-mortar retailers.

The report’s recommendations would hit states, like Kentucky, which rely heavily on the existing state sales and use tax to support essential government functions and services especially hard, potentially affecting everything from education to emergency services. Also, traditional Main Street retailers and consumers would keep paying taxes while e-commerce merchants and patrons would avoid them, unfairly punishing traditional retailers and further widening the digital divide.

Governor Patton said, “In Kentucky, we could see an annual loss of as much as $46.4 million in tax revenue by the year 2003. This proposal could severely impact our future ability to provide the citizens of the Commonwealth with the high quality of services they expect and deserve, from police and fire services to teacher salaries.  This report puts the profits of a few over the good of the whole people.”

Kentucky, like many other states, is struggling with the effects of e-commerce on main street retailers who have historically provided the backbone of states’ budgets with the collection of sales and use tax, the governor said. The Kentucky Long Term Research and Policy Center has reported that Kentucky may face as much as $140 million total in lost revenue due to increased catalog and Internet purchases by the end of 2002.

Kentucky is currently working with representatives from more than 20 states to develop a system that would reduce the burdens associated with tax collection responsibilities and encourage remote sellers to voluntarily collect states’ use tax from their customers. Charlotte Quarles, of the Kentucky Revenue Cabinet, has been appointed to serve as co-chair of one of the five sub-groups that will be working to develop the Streamlined Sales Tax for the 21^st Century. And legislative authority for the Revenue Cabinet to fully participate in the development and implementation of a pilot project to test the simplified sales  and use tax system is now pending before the General Assembly.

Governor Patton said, “We are not asking for any new taxes, we are simply asking that Congress not take away our ability to collect existing sales and use taxes, further increasing the divide between the haves and have nots, and jeopardizing our ability to fund basic services for the people of our state.”