WASHINGTON - A proposed extension of a moratorium on taxes for Internet access and goods purchased online needs further negotiations, the Senate Commerce Committee said Thursday.
U.S. Treasury Secretary Henry M. Paulson and Commerce Secretary Carlos M. Gutierrez had called for the abolishment of the e-taxes on Wednesday and expressed support for Senate Bill 1453 (the Internet Tax Freedom Extension Act of 2007), which went before the Senate Commerce Committee for markup Thursday. After meeting for an executive session to discuss the markup, the committee decided that further negotiations were needed.
"I am disappointed that the Commerce Committee was unable to act on legislation to extend the Internet tax moratorium at today's markup," Chairman Daniel K. Inouye (D-Hawaii) said Thursday after the meeting. "But after discussions with my colleagues, I believe that further negotiations are warranted. It is my hope that a reasonable compromise can be reached and that the committee will be able to take swift action in the future."
The present tax moratorium is scheduled to expire on Nov. 1. It began in 1998 with the Internet Tax Freedom Act, which was extended via the Internet Tax Nondiscrimination Act in 2004. In May, the National Governors Association supported a four-year extension of the moratorium. The current law does not prevent the collection of state taxes.
The U.S. Senate Committee on Commerce, Science and Transportation is composed of 22 senators led by Inouye and Vice Chairman Ted Stevens (R-Alaska).
Paulson and Gutierrez also called for permanent moratoriums on Internet-access taxes and multiple or "discriminatory" taxes on electronic commerce.
"The Internet is an innovative force that opens up the vast potential economic and social benefits of electronic commerce," Paulson and Gutierrez said in a joint statement. "Preventing the taxation of Internet access will help sustain an environment for innovation, ensure that consumers continue to have affordable access to the Internet - especially high-speed Internet - and strengthen the foundations of electronic commerce as a vital and growing part of our economy.
"Congress has an opportunity to demonstrate bipartisan leadership by passing essential legislation before the current moratorium expires on Nov. 1 of this year. We urge the Congress to expedite passage of a permanent extension so that President [George W.] Bush can sign it into law before the current moratorium expires."
