Internet Taxes!
Hold on to your wallet. A government panel to review the Net tax moratorium.
By Maria Seminerio, ZDNN - June 18, 1999 3:28 PM PT
Net e-commerce taxes called inevitable
More than six months after Congress banned e-commerce taxes for three years, the
advisory panel formed to decide what happens when the moratorium runs out will hold its
first meeting Monday.
The 18-member Advisory Commission
on Electronic Commerce, formed after the passage of the Internet Tax Freedom Act, must
deliver its recommendations to Congress by April 21, 2000. It has been hindered by
squabbling over its membership -- state and local governments said it was biased in favor
of high-tech companies.
But after local government groups filed a lawsuit in March
aiming to stop the commission from meeting, the disagreement was resolved when former Netscape
Communications Corp. executive Jim Barksdale resigned from the panel. This balanced
out its membership between tech executives and government officials. (A 19th official,
Virginia Gov. James Gilmore, serves as chairman of the panel.)
Behind the scenes
While the group's first meeting isn't likely to produce major news in itself,
behind-the-scenes discussions could produce heated debate with the end result being that
some type of e-commerce tax will be recommended to Congress, observers said.
"There is a growing consensus that there will be some kind of tax levied on
interstate sales" conducted over the Internet, said Jeff Eisenach, president of the Progress and Freedom Foundation think tank.
"The current system is untenable because it's too much of a disadvantage to
brick-and-mortar stores, and the idea of eliminating all e-commerce taxes forever just
isn't realistic," Eisenach said.
Even the high-tech executives on the panel are said to be coming around to the
view that such taxes are inevitable, said Clyde Prestowitz, president of the Economic Strategy Institute think tank.
"The question is, should transactions on the Internet somehow be treated
differently than other transactions?" he said in an interview. "There's a
growing feeling that the Net shouldn't be subsidized."
Efforts to reach commission members for comment Friday were unsuccessful.
The problem, Prestowitz and Eisenach said, is that nobody's yet figured out how
such taxes would be levied, and who would collect them. Setting up guidelines for such a
system is likely to be the major topic of discussion for the group over the coming months.
State and local taxes, too
Some lawmakers, such as Rep. Billy Tauzin, R-La., have also predicted that state
and local governments will ultimately be successful in levying e-commerce taxes.
Members of the panel include AT&T
(NYSE:T)
CEO C. Michael Armstrong, Dallas Mayor Ron Kirk, America
Online Inc. (NYSE:AOL)
President and COO Bob Pittman, MCI
WorldCom (Nasdaq:WCOM) COO
John Sidgmore, and Washington Gov. Gary Locke.
The meeting will be Webcast
starting at 4 p.m. ET Monday at the commission's Web site.
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