Municipal officials pushed on Internet taxation

Calling the matter "the most important issue facing cities today," the mayor of Dallas, a state senator from Illinois and a WalMart executive all spoke passionately to a crowd of hundreds at the Los Angeles convention center.

Dallas mayor Ron Kirk said cities must insist that Congress allow local taxing of Internet transactions not to be greedy but to ensure the survival of key local services.

"It's about roads, about schools, about fire trucks, about public safety and about doing all the things we do at the local level and how we pay for it," Kirk said. "But it can't just be about money, it has to be about equity and stopping Congress from issuing the largest unfunded mandate in history."

Illinois State Sen. Steven Rauschenberger said that it is not fair to force brick-and-mortar merchants to tax while exempting e-commerce businesses.

"We need a level playing field," Rauschenberger said. "We can't let those in a political rush to gain popularity points amid a new group of lobbyists make public policy."

And David Bullington, vice president of taxes for WalMart, said if the Internet remains sales-tax free, it will only lure more traditional sellers onto the Web, leaving cities and states even further in the hole.

Kirk, who serves on an advisory commision that is charged with giving Congress a recommendation on the issue by next spring, said his group is so split on the issue that it will be almost impossible to give Congress the three-quarters majority opinion it wants. He said city leaders must convey their concerns to their representatives immediately.

"We are on very thin ice with this," he said, "unless you go home immediately and get in the face of your senators and representatives."

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