For Immediate Release Contact: Jim Campi
April 13, 2000 (202) 467-5300


CAGW blasts NGA for claiming poverty when state coffers are overflowing

(Washington, D.C.) – Citizens Against Government Waste (CAGW), America’s largest taxpayer watchdog group, today chided the National Governors’ Association (NGA) for a letter the organization sent to Congress calling for taxation of e-commerce.  In the letter, NGA officials claimed that untaxed Internet transactions are costing state and local governments $25 billion a year.

“Awash in a sea of tax revenue, all these governors can think about is getting their hands on even more money,” remarked CAGW President Thomas A. Schatz.  “They should be ashamed of themselves.”

In the letter, written to Republican and Democratic leaders of the House and Senate, 36 governors urged congressional support for a complicated system to collect taxes on commerce conducted over the Internet.  To buttress their argument, the governors claimed that the failure to do so would “reduce other existing state and local tax revenues by over $25 billion a year.”

Schatz argues that nothing could be further from the truth.  “Because of the exceptionally strong economy – much of it driven by the sector NGA wants to shackle – state and local coffers are overflowing with tax revenue.”  Schatz cited figures indicating that between 1992 and 1998, state revenues grew at almost twice the rate of inflation plus population growth.  In 1998, the 50 states closed their books with a combined surplus of $36 billion.  In 1999, state budget reserves were at their highest level in nearly two decades.

“State governments around the country are running budget surpluses,” remarked Schatz.  “They don’t need the additional tax revenue.  Unfortunately, many governors see technology creating new wealth, and can’t wait to take a bite out of it.  This kind of e-greed by government could be ruinous to the Internet economy.”

CAGW recently released a report on Internet taxation entitled Control, Alt, Delete:  How Taxation Threatens to Shut Down Commerce on the Internet.  The report supports the conclusions of Gov. Jim Gilmore (R-Va.) and the Advisory Commission on Electronic Commerce that the moratorium on Internet taxation should be extended for five more years.  Control, Alt, Delete is available on CAGW’s website,

CAGW is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.


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