Executive Summary

State and local government finances are being undone by rapid changes in global commerce and technology, particularly the rise of the Internet. The key revenue base of state and local governments--sales taxes--is being undermined through the rise of untaxed commerce on the Information Superhighway.

The Emerging Crisis:

Roots of the Crisis:

The Burdens on Local Government from the Sales Tax:

Recommendations:

To respond to the challenges of rising electronic commerce, the Center for Community Economic Research makes three broad policy recommendations:

The threatened loss of local sales taxes due to mail-order and on-line commerce should be treated as an opportunity to look more closely at the burdens we put on local and state governments. We should question whether such burdens make sense in a world where multinational corporations often outpower whole states in total assets and can pit such local governments against each other in competition for jobs and l ocal revenue.

Center for Community Economic Research

c/o 2521 Channing Wy. Berkeley, CA 94704 (510) 643-8293 * ccer@violet.berkeley.edu