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Second Regular Session

Sixty-first General Assembly

LLS NO. R98­0865.01 BJA

STATE OF COLORADO

BY REPRESENTATIVES Hagedorn, Agler, Clarke, May, and Tate;

also SENATORS Schroeder, B. Alexander, Ament, Matsunaka, Wattenberg, Wells, and Wham.

FINANCE

HOUSE JOINT RESOLUTION 98-1018

WHEREAS, The Internet is a massive global network spanning local government, state, and international borders; and

WHEREAS, Transmissions over the Internet are made through packet­switching, a process that makes it not only impossible to determine with any degree of certainty the precise geographic route or endpoints of specific Internet transmissions but infeasible to separate interstate from intrastate Internet transmissions or domestic from foreign transmissions; and

WHEREAS, The United States Supreme Court has ruled that state taxation of companies operating outside the borders of the state is constitutional only if there is a substantial connection between the state and the company and the tax is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to services provided by the state; and

WHEREAS, The tax laws and regulations of local governments, state governments, and the federal government were established long before the Internet or interactive computer services became available; and

WHEREAS, Taxation of Internet transmissions by local, state, and federal governments without a thorough understanding of the impact such taxation would have on Internet users and providers could have unintentional and unpredictable consequences and may be unconstitutional if it does not meet the tests set forth by the United States Supreme Court; and

WHEREAS, The United States Congress is being asked to consider federal legislation that would establish a national policy on the taxation of the Internet and other interactive computer services; now, therefore,

Be It Resolved by the House of Representatives of the Sixty­first General Assembly of the State of Colorado, the Senate concurring herein:

That the Colorado General Assembly does not support at this time any Congressional action that would establish a national policy expanding taxation of the Internet and other interactive computer services.

Be It Further Resolved, That the Colorado General Assembly endorses a moratorium on taxation of the Internet and interactive computer services until the impact of such taxation can be thoroughly studied and evaluated.

Be It Further Resolved, That the Colorado General Assembly encourages Congress to establish or appoint a consultative group to study, evaluate, and report back to Congress on the impact of any taxation on the use of the Internet and other interactive computer services and the users of those services.

Be It Further Resolved, That any consultative group established or appointed by Congress should include state and local governments, consumer and business groups, and other groups and individuals that may be impacted by a national policy on the taxation of the Internet and other interactive computer services.

Be It Further Resolved, That copies of this Joint Resolution be sent to the United States Senate, the United States House of Representatives, Governor Roy Romer, the National Governors' Association, and each member of the Colorado Congressional Delegation.