Governors, Clinton Agree: Wait on Internet Taxes

July 7, 2008 - 8:02 PM

( - The nation's governors emerged from a roundtable meeting with President Clinton on Monday agreeing to postpone state Internet tax legislation. However, the governors received Clinton's promise to actively consider ways to make up for tax revenue lost to Internet sales.

In Washington, DC, for the National Governors' Association's winter meeting, Governor Michael Leavitt (R-Utah), the NGA's chairman, told the National Journal's Congress Daily that his fellow governors and Clinton agreed that traditional and Internet retailers all needed a "level playing field ... There is a point in the life of every problem where it's big enough to see it and small enough to solve it."

Leavitt added that it was too early to tell if an Internet sales tax would be a "viable tool."

Governor Gray Davis (D-CA), whose state's economy is fueled by the technology boom, implored his fellow governors to wait to see how the Internet economy develops.

"If in doubt, do no harm," Davis said. "Let's let the technology ... grow another two or three years before we decide what we're going to do."

Leavitt predicted members of Congress would introduce legislation this spring following a March meeting of the Advisory Commission on Electronic Commerce where that panel is to consider its final recommendations, but that Congress would take no action this year.

Another spurt of Internet commerce during December's shopping season would unleash a "stampede of retailers" to get into e-commerce, Leavitt said, and the debate would then mature.

"Ultimately, retailers are going to stampede with one phrase on their mind: level playing field," Leavitt told the National Journal's Congress Daily.

Clinton used the event to push an agenda that included free trade, education and a Medicare prescription drug benefit, while also announcing federal assistance to reduce rising oil prices.

Clinton told governors the nation can "not shut ourselves out of any part of the world," specifically noting the "importance of bringing China into the [World Trade Organization.]"

Although the NGA is unlikely to adopt a China policy, Leavitt said many governors offered their "considerable support" to Clinton for permanent normal trade relations status with China and China's entrance into the WTO.

"There was a broad expression among individual governors in support," Leavitt said. In turn, Clinton solicited their assistance. "He said, 'Help me out if you can,'" Leavitt said.

Clinton and the governors also discussed the extension of the Children's Health Insurance Program and a prescription drug benefit.

Governor Parris Glendening (D-MD), the NGA's vice chairman, urged Congress to move on the drug issue. "We cannot put aside the people's business just because it's an election year," Glendening said. "It's probably good politics to go ahead and get this done."