HomeMy WebLinkAbout19410 RES - 07/29/1986A RESOLUTION
SUPPORTING LEGISLATION TO REQUIRE MAIL-ORDER COMPANIES TO
COLLECT AND REMIT STATE SALES TAXES; AND DECLARING AN
EMERGENCY.
WHEREAS, local businesses pay local property taxes to support local
schools, city, and county governments; and
WHEREAS, local businesses further provide payroll for employees who
also in turn pay local property taxes to the City of Corpus Christi; and
WHEREAS, local businesses are required by State Law to collect and
reimburse the state sales tax to the State of Texas, and the City of Corpus
Christi; and
WHEREAS, large national out-of-state mail-order companies who sell
products to .Texas residents are not required to collect and remit the Texas
state sales tax; and
WHEREAS, these large out-of-state mail-order companies take $3 billion
a year out of Texas and in return give nothing toward the support of Texas local
and state institutions or toward the Texas economy; and
WHEREAS, the sales tax on locally sold products and the lack of the
sales tax on mail-order sales gives the out-of-state mail-order operations an
unfair competitive advantage; and
WHEREAS, the State of Texas is losing $100 million a year in potential
sales tax revenues so long as these out-of-state mail order operations remain
outside the reach of the state sales tax:
NOW, THEREFORE, BE IT RESOLVED BY•THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. That the City of Corpus Christi goes on record in asking
our representatives in Congress to immediately support legislation to require
mail-order companies to collect and remit state sales taxes and use taxes on all
purchases ordered from within and delivered within the State of Texas.
SECTION 2. That upon written request of the Mayor or five Council
members, copy attached, to find and declare an emergency due to the need for
efficient and effective administration of City affairs, such finding of an
emergency is made and declared requiring suspension of the Charter rule as to
consideration and voting upon ordinances or resolutions at three regular
meetings so that this resolution is passed and shall take effect upon first
reading as an emergency measure this the 29th day of July, 1986.
ATTEST:•
y Secretary
APPROVED: 2.y DAY OF JULY, 1986
f
MAYOR
THE CITY OF CORPUS CHRISTI, TEXAS
19410 MICROFILMED
Corpus Christi, T as
jet day of ,y , 198tt
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the •foregoing ordinance
or resolution, an emergency exists requiring suspension of the Charter rule
as to consideration and voting upon ordinances or resolutions at three
regular meetings; I/we, therefore, request that you suspend said Charter rule
and pass this ordinance or resolution finally on the date it is introduced,
or at the present meeting -of the City Council.
Respectfully, Respectfully,
Council Members
The above ordinance
Luther Jones
Dr. Jack Best.
David Berlanga, Sr.
Leo Guerrero
Joe McComb
Frank Mendez
Bill Pruet
Mary Pat Slavik
Linda Strong
was
'MAYOR
THE CITY OF CORPUS CHRISTI, TEXAS
passed by the following vote:
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The Honorable Luther Jones
Mayor
City of Corpus Christi
P.O. Box 9277
Corpus Christi, TX 78469
Dear Mayor Jones:
For some 20 years, state governments have been prohibited by a federal court
ruling from putting the state sales tax on mail order goods shipped into the
state.
This has given the big national mail order operators a five and six percent
advantage over your local merchants, and it has cost the State of Texas
$100 million a year in lost potential revenue.
We have a chance to change that now. U.S. Rep. Jack Brooks of Beaumont has
introduced H.R. 5021 to require the big national mailers to collect and remit
state sales taxes.
Congressman Brooks can pass this bill --but only if the members of Congress are
shown that there is widespread support back home. Here in Texas we are asking
Chambers of Commerce and trade associations to urge their members to write
their congressmen. Similar efforts are underway in all other states.
fork that
s H.R. 5021u and your colleagues join this effort by expressing your support
I want to point out that as the situation stands now, it will apparently be
impossible to include the local sales tax, because Texas does not have uniform
local tax statewide as many other states do.
e
tthisjbiyll's double-barrelat would t for local rg
new revenue for the State of Texas. your local merchants and
I am enclosing a fact sheet which goes into more detail on the problem and the
solution. If you want further information, please don't hesitate to call on us.
i"rely,
A(0)6
B0L !t »flock
Comptroller of Public Accounts
Austin, Texas 78774
July 10, 1986
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BOB BULLOCK
Comptroller of Public Accounts
BB/wps
Enclosure
Mail -Order
Sales Tax
Could Bring
Texas
Millions
A bill has been introduced in Congress
to require the nation's big mail-order
firms to collect state sales taxes. Texas is
now losing $100 million each year be-
cause itdoes not have authority to require
out-of-state firms to collect sales tax on
mail-order sales to Texans.
This year large out-of-state mail-order
companies will legally avoid collecting
Texas sales tax on $3 billion worth of
merchandise.
The purchases are taxable to the tune
of $100 million, but Texas has no effective
way to get the money.
State efforts to collect the tax are sty-
mied by a 1967 United States Supreme
Court ruling.
In that ruling, the court held that, while
states can impose a taxon mail-order sales
made by out-of-state companies, they can-
not make the companies collect and remit
the tax.
According to State Comptroller Bob
Bullock, "That 19 -year-old ruling hobbles
states like Texas which are trying to keep
their tax structures in line with their
changing economies.
"The ruling also hurts local merchants—
who must collect the tax—by giving an ad-
vantage in price to out-of-state mail-order
companies. In Texas that works out to a
four -and -an -eighth percent advantage.
And that's before you even talk about local
sales taxes or MTA taxes."
But help may be on the way.
A bill introduced in Congress would re-
quire large mail-order retailers to collect
and remit state sales tax. The bill would
also give equal footing to local merchants
struggling to keep pace with rapid changes
in the way Americans shop.
A Mail -Order Boom
Mail-order sales are booming nation-
wide and in Texas.
According to mail-order industry ana-
lyst Arnold Fishman, national sales surged
10 to 14 percent between 1983 and 1984
to reach $82.3 billion. The Comptroller
estimates national sales reached $88.1 bil-
lion in 1985.
Texas sales in 1985 accounted for about
seven percent of the national total.
The typical American spends between
$186 and $228 each year buying mail-
order goods. Most frequently purchased
through the mail are clothing and foot-
wear, magazines, gifts and books.
This boom in mail-order sales is expect-
ed to continue, fueled by technological ad-
vances such as electronic funds transfer,
"800" phone numbers and the looming po-
tential of shopping by home computer.
The Marketing Science Institute ex-
pects mail-order sales of consumer goods
to increase nine percent a year until 1990.
•
The state's potential tax loss increases
as the volume of mail-order sales
grows.
Why the Sales Aren't Taxed
The state's inability to collect sales tax
on mail-order sales results from a 1967
Supreme Court decision in National
Bellas Hess v. Illinois Department of
Revenue.
The court, citing the commerce clause
of the U.S. Constitution, held that "states
are prohibited from imposing the duty of
use tax collection and payment upon a sell-
er whose only connection with customers
in the state is by common carrier or by
mail."
Simply put, states can tax sales, but
they cannot make the retailers collect or
remit the tax.
Except for a few narrowly defined ex-
ceptions, the court has not wavered from
that decision, leaving states in a quandary
as to how to collect sales tax on these
transactions.
The Brooks Bill
To remedy this situation, Representa-
tive Jack Brooks of Beaumont in June in-
troduced a bill in Congress—HR 5021—
that would require large out-of-state
mail-order companies to collect and remit
sales tax on transactions made in states
that have such a tax.
Tax would be collected only by firms
with national sales exceeding $12.5 mil-
lion or sales in a single state exceeding
$500,000. The bill would not require out-
of-state mail-order firms to collect Texas
local or MTA sales taxes.
National mail-order firms claim this
would impose a harsh administrative bur-
den on them, but several big companies
who both own stores in Texas and conduct
mail-order operations have been collect-
ing the tax for years. There is no more bur-
den on these mail-order operations than
there is on any other multi -state
business.
Comptroller Bullock says passage of the
bill would "enable Texas to get the $100
million in sales tax that goes uncollected
each year...that Texas has to get from
someone else each year."
Representative Brooks' bill is before
the House Judiciary Committee. Efforts to
support the bill are being mounted bysev-
eral Texas business and trade groups. ■
City of Corpus Christi
July 30, 1986
The Honorable Solomon P. Ortiz
1524 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Ortiz:
Enclosed is Resolution No. 19410, passed by the City
Council of the City of Corpus Christi on July 29, 1986.
This resolution expresses support of H.R. 5021 which
would require national out—of—state mail order companies who
sell products to Texas residents to collect and remit the
Texas state sales tax.
We would appreciate your support in passing this
legislation when it is considered.
Sincerely,
Armando Chapa
City Secretary
/td
730.1
xc: Local State Legislators
Bob Bullock, State Comptroller
Mayor Luther Jones'
Corpus Christi City Council
City Manager Craig McDowell
This same letter was also sent to
Senator Phil Gramm
Senator Lloyd Bentsen
Congressman Jack Brooks (Beaumont)