The problem goes to the heart of two competing proposals put forth by gubernatorial members of the group. Specifically, Gov. Michael Leavitt of Utah is supporting the development of a national system that would encourage businesses to voluntarily collect sales taxes on Internet purchases. NACo is a Washington-based group that, along with six other government groups, backed Leavitt's proposal. Meanwhile, Gov. James Gilmore of Virginia has proposed a sweeping set of seven recommendations that would do away altogether with taxation of any kind on e-commerce transactions. Traditional companies grouse that Internet retailers don't have to charge a local tax.
Internet companies counter that there are no shipping costs involved in a trip to the mall.
But it doesn't address the issue of local governments not collecting money. The U.S. Chamber of Commerce, which represents all businesses, has not yet put forth an official position on Internet taxation. What we are trying to do is step back and look at this issue anew. Traditional businesses tend to lean toward the Leavitt proposal, while new businesses are more in favor of Gilmore's. Overall, Graham says, business may favor a status-quo situation in which Internet transactions are treated like catalog transactions.