State Tax Update Archive
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Illinois Senate urged to consider "choice"

Recently, the state's Wine & Spirits Industry Fair Dealing Act was suspended, after US District Judge Joan Gottschall found ample reason to question the law's constitutionality. We at Americans for Tax Reform (ATR) concur with her verdict, and are urging the Legislature to repeal this unfair and unnecessary law, which is, in effect, a punitive and irritating tax on the good people of Illinois.

By forcing liquor manufacturers to seek approval from the Liquor Control Commission and demonstrate "good cause" before terminating any contract with a distributor, those distributors had a distinct advantage over the manufacturers. The distributors were insulated from the disciplines that only a free market can enforce, having been sheltered by a government agency charged with the task of severely restricting the distribution options of the manufacturers. Any business protected by law from the rigors of the free market need not concern itself with efficient delivery of goods and services, providing customers with maximum value at low cost, or consistently attending to their customers' needs in order to secure their continued patronage.

Therefore, it's scarcely surprising that liquor prices rose upwards of $1.46 per liter after the law's passage-there was nothing to effectively keep the distributors from raising their prices for distilled spirits 3%, 5%, even 10%! In the absence of the Wine & Spirits Industry Fair Dealing Act, a manufacturer could have easily punished such chicanery by quickly taking its business to another distributor. And now that the law has been set aside for the time being, liquor prices in Illinois will have a chance to regain their natural market equilibrium.

Kansas Alert- Karl Peterjohn (KTN)

In legislative action today, the State Senate rejected the Internet Tax Freedom Amendment offered by Senator Tim Huelskamp (R-Fowler).  According to Senator Huelskamp, "This amendment was a clear opportunity to reject Internet access taxes and E-mail taxes."  The Internet Tax Freedom Amendment, offered to Senate Bill 560, would have adopted into state statute the current Congressional moratorium on Internet access taxes, E-mail taxes, and discriminatory taxation on Internet sales.  This moratorium will expire October of 2001.

Instead, the Senate, by a margin of 15 to 25, clearly left open the possibility of a future special tax on Internet access, E-mail, Internet sites, and Internet bulletin boards.  A concerned Senator Huelskamp noted, "I can only believe that those Senators who rejected this amendment have higher taxes in mind.  And they plan on beginning with the Internet.  This does not bode well for E-commerce in Kansas." 

Senators who are in favor of protecting the Internet from special, discriminatory taxation include:  Bleeker, Brownlee, Clark, Donovan, Hardenburger, Harrington, Huelskamp, Jordan, Kerr, Lawrence, Pugh, Ranson, Salmans, Tyson and Umbarger.

Senators who rejected the opportunity to prohibit Internet access and E-mail taxes included:  Barone, Becker, Biggs, Bond, Corbin, Downey, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hensley, Jones, Langworthy, Lee, Morris, Oleen, Petty, Praeger, Salisbury, Steffes, Steineger, Stephens, Vidricksen, and Vratil.

Kentucky tax increases DOA

Kentucky governor Paul Patton (D) admitted yesterday (2-24-00) that he had lost the battle to increase gas taxes, sales taxes and apply a tax to glass products ($288 million increase).  Saying he had not yet lost the war, he announced a new proposal that would apply a 7% tax on telecommunications services, including interstate long-distance telephone calls and satellite TV.  The proposal would raise taxes $178 million dollars.