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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: /T 1r Of. 19410 512.403-4000 LBJ Stat. Offlm Bu;IM;,,g 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 �f • !le;?6, Si 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)