By Mayor Joe Keck

There has been considerable discussion concerning whether or not purchases made over the Internet should be subject to state and local sales taxes. Most state and local governments that are heavily dependent upon sales tax revenues to provide basic services to their communities feel that Internet sales should be taxed like any other sale.

In Cortez, approximately 70 percent of our annual general fund revenues are derived from sales taxes. This revenue is used to provide law enforcement, street construction and maintenance, parks and recreation, libraries, street cleaning, general management, golf courses, etc. If 20 to 25 percent of our sales tax base is lost to non-taxed Internet sales (which is not unlikely given the projections for Internet sales growth over the next 10 - 20 years), the City’s ability to provide basic services to its citizens will be severely threatened.

Those opposed to taxing the Internet with sales taxes take the position that state and local governments are not providing any services to these Internet companies that could be located in Texas, California, or even in China, and therefore, the sale should not be taxed.

This assumption is not an accurate one. These companies will hire UPS or another company to deliver the product to the customer. That delivery company will be using federal, state and local roadways to deliver the product.

As most folks know, federal or state gasoline taxes pay very little for county or local roads. Your local property and sales taxes are paying for the lion’s share of these costs. The State of Colorado is subsidizing the highway system by using a portion of the state income tax revenues. The City of Cortez spends approximately $1,000,000 annual to keep our roads up to a reasonable standard.

The next question is if the state and local government can’t provide basic services due to declining sales tax revenues, then who do you think will be called upon to take care of this? That will probably be you, as the citizen taxpayer. You will pay this in higher sales taxes, higher property taxes, fees, etc.

Should local citizens who shop on the Internet be able to avoid paying for their fair share of the law enforcement needs of the community or the street needs, etc., by virtue of simply buying the goods over the Internet? I don’t think so.

Another issue is the impact that no taxation of Internet sales will have on small business. If I own a business in Cortez, I collect a 6.95 percent sales tax from customers on all income taxes and personal property taxes on fixtures. These taxes are used by the state, county, schools, city, etc., to provide basic services to citizens. What happens to the small business community when an Internet company takes over 20 to 25 percent of the market, and has a federally mandated 7 percent or greater margin due to the fact that they are not taxable?

How long do you think it would take to lose a significant portion of the small businesses in the community? What happens to the employees and owners of those businesses? What happens to the community organizations that depend on those businesses to provide to financial support for their causes?