Just as the issue has seemingly split the nation's governors, with two Republicans leading respective factions for and against the idea, those adult Internet hosts and Webmasters joining up for ia2000 here seem divided on whether taxing the Internet is a sound idea.
Perhaps unsurprisingly, those whose work includes retailing, like Wicked Interactive head Aaron Karacas, are hitting the ground running against Net taxes.
"I think the e-commerce is so explosive right now," he says, "if you try to tax and regulate it it just leads to people going other ways to (make) their credit card transactions. The taxes won't hurt (us), but it just would be tougher to deal with all the taxes and the regulations."
Karacas says big Web retailers are pouring heavy efforts into a permanent ban on Internet taxes. A current Federal moratorium on Net taxes expires in 2001. "People like Amazon.com who are doing tens of millions of dollars of transactions…are going to fight it," he says. "And we agree. We're going to fight it, too. We're already paying enough state taxes."
"I've got to tell you, I think it's the worst thing they can try to do," says Rick Cohen, president of Fraud Action Network Services (FANS), a kind of Internet collection company. "I think it's just a way to divert a lot of people from using the adult sites."
Cohen also says Net taxes could spur many to renege on previously-agreed payments and cause a jump in credit-card chargebacks. "The chargeback rate already is tremendously high as it is, and this would be another excuse," he says, adding that the adult Internet industry should band together against Internet taxes.
Some adult Internet people said they hadn't even known much about the issue, when they knew it existed at all. "I was unaware of it, too, until people brought it to my attention," Cohen says.
Others among them say it may not even affect the adult Web. "I don't know that it does anything for the adult industry," says YNot's Peter Muenyong. "Yeah, you've got the shopping industry which sells products which might be affected by (Internet) sales taxes, but other than that…a little bit, maybe, but the majority of adult sites are run by membership sales. Indirectly, though, everybody might be affected, I think, but everybody learns to live with it.
"The government's going to do what it wants to do anyway."
AgeCheck.com's David Dginger is one of those who takes a wait-and-see attitude on Internet taxes. "Once it happens, then we'll take it from there, but there's no need to worry about it until we find out what's really going on," he says.
Free Speech Coalition lobbyist and adult film legend Kat Sunlove, however, says Internet taxes may not be the devil many fear them to be. She says some smaller Internet players might get hurt by them, but overall, she says, the question will come down to fairness.
"The brick and mortar stores are, in fact, collecting and paying their sales tax and dealing with taxes," she says. "But we have a real mixed bag. Look at the mail order model. Some of the bigger players are also getting around the whole issue of not having it in a state with a high sales tax by locating shipping facilities outside that state."
Sunlove agrees with the current Clinton Administration position on Net taxes - as she puts it, "let's leave it alone for the time being, but let's not rule out the possibility of taxation (in the future). It's just another mode of selling...and the states want their taxes, they want your money one way or the other, and they're going to find a way to get it."
