Make Net Tax Moratorium Permanent: Three Fed Lawmakers

Three federal lawmakers are stepping up the push to make an existing national moratorium on new Internet taxes permanent.

Two of the lawmakers - Sen. Ron Wyden (D-Ore.) and Rep. Christopher Cox (R-Calif.) - sponsored the original 1998 moratorium which was extended three years later and now expires in November. The moratorium blocks taxing Internet access, multi-state sales taxation of single items, and discriminatory Net taxes treating cyberpurchases differently than other purchases.

Now the two have been joined by a third - Sen. Conrad Burns (R-Mont.) - in pushing for a permanent moratorium. And that's a powerful enough partner for such a push: Burns chairs the Senate Commerce Committee's communications subcommittee.

"With the current state of the economy, it's important we uphold commonsense tax laws that are fair to businesses," Burns said in a statement after aligning to Wyden and Cox. "I know how hard it is to stay above water right now, and it's unreasonable to burden businesses and organizations with taxes that drag them under. This moratorium puts e-businesses on a much more level playing field, and I believe it is time to make it permanent."

Wyden said in his own statement that the moratorium puts e-tail on an equal playing field to other retailers. "I believe they should be protected once and for all from unfair taxes that threaten their survival," he said. "States have never proven they've been injured by their inability to discriminate against online sellers, and e-commerce has grown exponentially under the protection of the Cox-Wyden law. It's time to make this ban permanent."

But several state governors have claimed exactly that, and so have lawmakers in several states who say the cyberworld's refusal to pay "its fair share" means putting an untoward burden upon state residents for paying for vital state and regional services. Those states are pushing to overcome a restriction on forcing remote sellers to collect and remit local sales taxes on Internet transactions. The Supreme Court ruled over ten years ago that states could only tax companies having a physical presence in those states.

Burns's alignment to Wyden and Cox has another thrust in its favor - Burns has sponsored spam-fighting legislation in the recent past. His most recent bid, nicknamed the Can Spam Act of 2001, died when then-Senate Majority Leader Tom Daschle (D-South Dakota) refused to bring the bill to a floor vote, but Burns has said he would try to bring it back once again.

"If this Congress is to deal seriously with the issue of jumpstarting the economy, than we not only need to consider tax cuts but also ways to regulate the costs that are preventing businesses from taking genuine steps towards growing," Burns said after a January hearing of his subcommittee. "Spam is the Trojan Horse for e-commerce. When consumers begin to feel their personal information has become a commodity for out-of-control marketers, they will turn away from shopping online."