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UPBEAT MOOD AS MEMBERS VISIT HILL

By Dave Bodamer

From left: Rep. David Vitter, R-La.; ICSC trustee James E. Maurin; and ICSC member Kenneth S. Lamy discuss sales taxes on Internet purchases.

WASHINGTON, D.C. — ICSC members from 32 states made their annual trek to Capitol Hill in March, pushing hard to win support for bankruptcy reform and to continue to plead the case that Internet retailers should collect and remit taxes on sales conducted over the Internet.

By the time they left Washington, bankruptcy reform was one step closer to reality.

A sense of promise pervaded ICSC’s 13th annual Congressional Contacts Meeting (CCM) as members found themselves in the right place at the right time with a Congress and a Republican administration seemingly in tune with the industry’s needs. This year’s meeting, in fact, included a White House briefing from members of President George W. Bush’s senior staff, something that had not occurred at a CCM since 1993. Moreover, a bankruptcy reform bill that would greatly benefit shopping center owners had passed the House just days before ICSC members arrived, and a similar measure was being debated in the Senate as ICSC members made the rounds in the Senate and House office buildings.

On another front, as ICSC members were leaving Washington, Sen. Byron Dorgan, D-N.D., was on the verge of introducing legislation to extend the moratorium on so-called discriminatory and use taxes on the Internet — but with a provision mandating that sales taxes be collected. During the course of the second day of CCM, legislators expressed support for ICSC’s position on that issue. However, some ICSC members felt there was still work to be done.

“Until municipalities really come on board and start coming with us on these visits, it’s going to be a tough fight,” said Brooks Holstein, senior vice president of Stirling Properties, Biloxi, Miss. “In small states like Mississippi [sales taxes] are 50% of our revenue. Local officials need to come up here and tell legislators, ‘You’re killing us.’”

The two-day meeting began with a luncheon address at the Rayburn Building by Rep. J.C. Watts, R-Okla., who backed President Bush’s tax-cut plans. Watts also pledged his support for compelling retailers that sell goods over the Internet to collect and remit sales taxes, prompting a round of applause from ICSC members.

Rep. J.C. Watts, R-Okla., pledged his support for collecting taxes on Internet sales.

“I’m opposed to taxing access to the Internet,” Watts said. “But I’m supportive of collecting the tax on Internet sales. ... [Uncollected tax] hammers all communities, and it hammers rural America.”

After the luncheon, members were addressed by several legislators during an afternoon session followed by a meeting at the Old Executive Office Building with two members of President Bush’s senior staff.

Rep. Anne Northup, R-Ky., Sen. Charles Grassley, R-Iowa, and Dorgan addressed smart growth, bankruptcy reform and Internet taxation, respectively.

Grassley sponsored the bankruptcy reform bill that was debated on the Senate floor. He explained the prime motivation behind the bill — which is nearly identical to one he sponsored that was passed by the Senate in 2000 — is that too many people are taking advantage of the bankruptcy code to escape paying debt. “People think there’s a free lunch and they use the bankruptcy code to get around paying. I want to send them a message,” Grassley said.

In terms of the provisions that specifically affect shopping centers, Grassley said tenants that file for bankruptcy should have to live up to their word.

“Retailers should not be able to use bankruptcy to sell their leases to tenants in another line of business. The tenant mix of a mall is delicate. One lease could affect the whole lineup of a shopping center,” Grassley said. “That’s why there’s a provision for bankrupt tenants that they have to sell to similar businesses.”

Sen. Dorgan is the sponsor of a bill that would extend the moratorium on so-called discriminatory and use taxes on the Internet but also would force sales taxes to be collected under a simplified system. Dorgan’s bill would require e-tailers to employ a simplified sales tax structure (one rate per state) so that they would not have to deal with the more than 7,200 different local tax codes in use in the United States today.

“The problem is with respect to fairness,” Dorgan said. “We’re trying to require the collection of existing taxes. That’s all we’re trying to do. ... As Congress votes to extend the moratorium [on Internet taxation] — and it will — we want it to attach a provision to force collection of taxes by remote sellers.

“We’re threatening the funding of elementary and secondary education,” Dorgan added. “The [sales tax] leakage is going to be dramatic and dramatically increased if we don’t do something about it now.”

Northup, who is a member of President Bush’s Steering Committee and in her third term as a congresswoman, touched on several of the issues important to ICSC members but focused primarily on smart growth.

“We’re one of the most overstressed generations that this country has ever seen,” Northup said. “A good transportation system and places to shop are important. ... Too often the concept of ‘smart growth’ actually means no growth. Most families in this country have a similar dream: to someday buy a home. With that, there have to be places to buy groceries, places to go shopping that are not too far away. To demonize these things is wrong.”

Northup said she encouraged growth driven by communities and developers and said that the government should protect the environment, but only when sound scientific policies were being implemented.

The White House briefing included addresses from Ken Mehlman, assistant to the President and White House political director, and from Larry Lindsay, director of the National Economic Council of the Executive Office of the President. Mehlman provided an overview and analysis of the 2000 election, while Lindsay pushed President Bush’s tax plan, including arguing for elimination of the so-called marriage penalty and abolishment of the estate tax. He also gave his thoughts on the economy.

“The data are always lagging [behind] reality some. We bring in business people to tell us what is really happening,” Lindsay said. “In the high-tech sector things are slowing very, very quickly. ... We don’t want to sit around and wait for the data to catch up with reality.”

Days after the meeting concluded, the Senate did pass Grassley’s bill by an overwhelming margin, leaving all of the ICSC-backed provisions intact. As of press time, the bill had entered the Conference Report stage, where members from both the House and Senate resolve differences between the respective versions of the bill. After the Conference Report, the one amended version of the bill is submitted for a vote to both the House and Senate before it is sent to the President. President Bush has said that he would support whatever bankruptcy reform package Congress voted on, which is good news for ICSC.

 

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