"Read our lips - no new Net taxes!" That's the message the Advisory Committee on Electronic Commerce is sending Congress, after some speculation that they might not be prepared to make any recommendation on the contentious question of whether or not to tax the Internet.
The panel recommends a permanent ban on taxing Internet access, refraining from applying state and local taxes to the Web, and repealing a century-old telephone tax.
Most of the panel endorsed extending the current moratorium on Net sales taxes by five years from the current October 2001 expiration date, and called on state and local governments to simplify their sales taxes. They're not saying no sales taxes ever, however; merely saying sales tax systems should be made simple.
The Net sales tax issue especially divided the panel, with one faction saying exempting the Net from sales taxes was unfair to brick-and-mortar businesses and also cost the states and local governments millions in tax revenues. The other faction, however, said taxing the Internet would all but hold the arguably most dynamic part of the coming economy hostage to government whim and obstruction.
The committee made its recommendations March 20, and expected to work one more day to wrap up. Its report is due to Congress April 21.
The telephone tax in question was imposed in 1898 to finance the Spanish American War. The Clinton Administration opposes its outright repeal, saying its projected haul of $52 billion over 10 years "must be weighed against other important priorities."
