Taxing the Internet and the TABOR amendment were the first two issues brought up before the state’s Commission on Taxation. As good as they are, though, they should not be the last. Colorado’s tax policy and its consequences for local communities merit a thorough and critical examination.

The commission held the first of a series of statewide meetings Tuesday night in Durango. The 15-member board was appointed in August to look at Colorado’s state and local tax structure. "We’re going through an education process," said Joe Chavez, a commission member from the Front Range.

That process began with Durango Finance Director Sherry Eilbes raising the issue of tax-free shopping on the Internet. It is a topic that could have particularly dire consequences for small towns. "Who’s going to pay for your police department if you’re buying everything online?" Eilbes asked. It is a good question, and the answer is not Amazon.com.

Discussions of taxing the Internet are almost always couched in the wrong terms. The question is not whether Internet sales should be taxed. The real question is: Why should online businesses be subsidized?

Apologists for a tax-free cyberspace cast the Net as a 21st-century frontier, and online entrepreneurs as free-market pioneers. In fact, what they espouse is an example of what is sometimes called industrial policy – the preferential treatment of an industry to further a social or economic goal set by government planners.

It is the economics of Walter Mondale and Michael Dukakis, except that in this case the government is protecting not factory workers’ jobs but dot-com millionaires against competition from local merchants – our own neighbors. Eilbes did well to lay that out in front of the commission.

TABOR, too, should be on the commission’s mind. Local governments have long recognized the so-called Taxpayers’ Bill of Rights for a train wreck waiting to happen. That it is a part of the state’s Constitution probably ensures that the wreck has to happen before the fix, but the commission should acknowledge that and begin to plan the cleanup.