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Congress to Hold Hearings on Internet Tax Bill

Cox-Wyden aims to prohibit federal or state taxation on electronic commerce.

By Mindy Charski, PCWorld   

Identical bills, sponsored in the House by Christopher Cox, a California Republican, and in the Senate by Ron Wyden, an Oregon Democrat, would establish a national policy against state and local interference with interstate commerce on the Internet. The bills also call for a moratorium on any taxation of electronic transactions.

The House Commerce and Judiciary committees will consider the bill soon, said Paul Wilkinson, communications director for Cox.

The Commerce Department has estimated that purchases over the Internet could total $70 billion within five years. Electronic commerce conducted on the Net, which include sales of software, online newspapers, and database services, generated $500 million in total receipts in 1995 and $1.1 billion in 1996, according to information supplementing Cox%squots bill.

%dquotState governments are concerned they will lose the ability to collect revenue for sales taxes for transactions on the Internet,%dquot said Carol Darr of the Information Technology Industry Council, an association of computer makers and Internet service providers that includes AT&T, Apple Computer, and Xerox.

%dquotYou want to strike a balance where the Internet is not unfairly disadvantaged just because it%squots the Internet,%dquot Darr said. %dquotAnd you have to strike a balance between people using the Internet, state governments, and non-Internet retailers who don%squott want to be disadvantaged either.%dquot

Although the association has not taken an official position on the bill, Jan Goebel, another council official, said the Net %dquotwill grow a lot faster if there is simplicity. Companies in the business of making the Internet grow are very supportive of national policies like Cox-Wyden, rather than 50 state policies.%dquot