Deputy Secretary Says Internet Taxes Should Be Considered

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U.S. Deputy Secretary of the Treasury Stuart Eizenstat said yesterday that state and local governments should develop a simplified sales tax within two years to level the playing field between Internet and traditional retailers, according to wire reports.

Eizenstat said the current tax code should remain unchanged while a new across-the-board tax structure is being developed. He also said the new tax system should be fair to both Internet and traditional retailers, be less costly for businesses to comply with and ensure consumer privacy. He also called for careful monitoring of the effects of any new taxes on low-income Americans and the feasibility of taxing goods like digitally downloaded music.

Eizenstat made his comments at a conference of the Tax Executive Institute in Washington.

Internet businesses only pay an easily avoided "use tax." Traditional retailers said the lack of e-commerce taxation creates an unlevel playing field, while e-tailers said taxation will slow the growth of e-commerce and the U.S. economy.

A moratorium on Internet taxation is in effect until October 2001.

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