City manager challenges California gov on e-taxes
- By Dan Caterinicchia, Dan Caterinicchia
- Mar 07, 2000
Responding to California Gov. Gray Davis' recent "do no harm" remarks in
favor of extending the moratorium on taxing Internet transactions, San Mateo,
Calif.'s city manager sent a letter to the governor detailing at least two
ways the lost tax dollars would hurt cities.
"For government to not require e-merchants to collect the same sales taxes
as traditional businesses is simply not fair and is not necessary to the
growth of e-commerce," Arne Croce wrote in the letter.
Croce also said that although the state is prospering from corporate income
taxes generated by Internet-based businesses, local governments do not see
any of that financial windfall. Davis said the state was "flush," thanks
to the corporate taxes.
"It is increasingly clear that the 1930s state and local government funding
system is ill-fitted to a 21st-century economy," Croce said. "If "California
is flush,' the first priority of the state budget should be to fully restore
the revenue taken from cities and counties in the early 1990s and to hold
cities and counties harmless for the loss of sales tax on Internet sales."
A spokeswoman for Croce said the governor's office has not reacted to the
letter yet, but a response is expected.