STATEMENT OF COUNCILMAN JOSEPH BROOKS,
                         CITY OF RICHMOND, VIRGINIA

                               on behalf of

     National League of Cities, National Association of Counties, U.S.
                           Conference of Mayors,
 National Conference of State Legislators, National Governors' Association,
   Council of State Governments, and International City/County Management
                                Association

                                   to the

                 Advisory Commission on Electronic Commerce

                    September 15, 1999 ­ New York, N.Y.

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Thank you Mr. Chairman and members of the commission for the opportunity to
speak to you today on behalf of the seven public interest groups
representing state and local government. Combined, we represent all states,
cities and counties of all sizes, and the thousands and thousands of
elected and appointed officials who run those governments. Let me assure
you that the work of this commission is and will continue to be our highest
joint priority for the immediate future. The recommendations that you make
to Congress next spring will have an enormous impact on our ability to
deliver public services to our shared constituencies. You definitely have
our undivided attention!

In addition to serving as a councilmember in Richmond, Virginia, I chair
the National League of Cities Finance, Administration, and
Intergovernmental Relations Committee which has been charged with
developing NLC policy on remote commerce, and I represented NLC on the
National Tax Association Communications and Electronic Commerce Tax
Project.

You have a copy of the state and local associations' statement of
Principles for Making Electronic Commerce Fair and Modernizing Sales Tax
Systems for the 21st Century. I will not repeat what is in the statement,
but will instead emphasize four key points that I hope will shape your
thinking on this important issue.

1. A permanently tax-free electronic marketplace would have a significant
impact on our ability to deliver essential public services. We're not
talking about taxing the Internet or adding new tax burdens to American
consumers. We are talking about collecting legally due sales and use taxes
on goods and services based on existing tax laws -- regardless of how those
purchases are made. We believe the lost revenue from tax-free online
shopping will be significant ­ between $9 and $11 billion by 2004. If our
sales tax bases shrink dramatically or even disappear because of tax-free
online shopping, we will be forced to raise taxes in other areas to provide
essential public services like police and fire protection and public
education. No elected official wants to raise taxes, increase user fees, or
eliminate fundamental services because a reliable and reasonably well
accepted revenue source was shut down.

2. Giving online vendors a competitive advantage over local merchants is
just plain unfair. I hope you all read the story in the June 27 edition of
The New York Times about Rivergate Books in Lambertville, New Jersey, which
closed after 10 years because the owner said she could not compete with
online booksellers. Yes, it is only one bookstore and it might have
happened anyway because of the convenience of online shopping. But, this
commission should not endorse action that will make it even easier for
Amazon.com and other online sellers to overwhelm Main Street businesses
because they offer consumers a tax break.

3. Dealing with 7,400 taxing jurisdictions with different bases and rates
will be challenging for national vendors. But the software to do the job is
readily available and already widely in use. It is ludicrous to suggest
that the high tech minds that have made it possible to buy anything anytime
from anywhere online could not design software to apply state and local
taxes to those purchases. We know of many vendors who say they can provide
the resources to online businesses at reasonable prices to minimize the
burden of collecting legally due sales taxes. At the same time, we support
and encourage voluntary efforts to simplify tax systems ­ such as the
Northwest Regional Sales Tax Pilot which is bringing together state, local,
and business leaders in Utah, Idaho, and Washington to explore ways of
simplifying their tax systems.

4. As state and local leaders, we are particularly concerned about the
growing "digital divide" and urge you to give serious attention to the
widening gap between Internet haves and have nots. Creating a tax benefit
that favors the wealthy, who are more likely to have computers and be able
to shop tax-free online, over the poor who will continue to pay sales taxes
for their store purchases will only exacerbate this growing problem. The
Internet revolution is bypassing the poor, minorities, and those who live
in inner cities and rural areas. You must be sure that the recommendations
you make today about the growth of electronic commerce do not widen the gap
between rich and poor in our country.

Having participated in the work of the National Tax Association Project, I
am well aware of the complexity of our tax structures and the challenges
that lie ahead as the Internet changes the way we all do business. There
are so many other examples of inventions and technological advances that
dramatically changed our day-to-day lives and required major adjustments in
public policy and business operations. We've adjusted to these major
changes before, and we can do it again. As the leaders of the nation's
states, counties, cities and towns, we urge you to pay close attention to
the principles we have outlined in our statement, which focus on the
importance of equity, fairness, and partnerships as we shape this new
marketplace. I can assure you that the seven state and local public
interest groups are ready and willing to work with you in any way we can as
you carry out this important responsibility.

Thank you.

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