Net tax battle returns

February 9, 2001: 12:18 p.m. ET

Bill would extend new online sales tax moratorium for five years
By Elizabeth Hurt

NEW YORK (Business2.com) - U.S. lawmakers brought the Internet tax battle back to the congressional floor this week, reintroducing legislation to extend the moratorium on new online taxes for another five years. The current moratorium expires in October 2001.

The legislation, jointly introduced Thursday by Sen. Ron Wyden, D-Ore., and Rep. Christopher Cox, R-Calif., bans so-called "discriminatory" taxes and access charges targeted at the Internet.



	The issue is in part about fairness, and in part about guaranteeing that taxing jurisdictions do not plunder interstate electronic commerce for their own benefit.



	Harris N. Miller

Wyden and Cox introduced a similar bill last year, which passed the House easily, but never made it to the Senate floor for a vote. While the moratorium is popular with the high-tech sector -- a group most Congressional lawmakers like to keep happy -- state and local governments say it unfairly hones in on their sales tax revenue.

This presents a thorny conflict for lawmakers, who obviously have a vested interest in the health of their home state economies.

"The debate on Internet tax, or more accurately the taxation of remote commerce, is not about whether commerce should be taxed or not," said Harris N. Miller, president of the Information Technology Association of America (ITAA), which lobbies for high-tech firms. "The issue is in part about fairness, and in part about guaranteeing that taxing jurisdictions do not plunder interstate electronic commerce for their own benefit."

The bill also calls on states to define an acceptable, standardized tax simplification plan, a goal which some states are already pursuing. In January, the National Conference on State Legislatures endorsed a proposal by 29 states to create a uniform tax system.

"Simplification of the nation's existing sales tax codes protects small- and medium-sized businesses from being overly burdened by the costs and complexities of working with more than 7,600 different sales tax regulations," said Frank G. Julian, vice president for Federated Department Stores.