House Democratic Leader Supports Two Year I-Tax Extension

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House Democratic Leader Richard Gephardt (D-MO) said on this week that he supports a two-year extension of the current moratorium on new Internet taxes rather than the five years backed by the majority of a special advisory panel.

The panel, the 19-member Advisory Commission on Electronic Commerce, met in Dallas last week and backed a plan supported by anti-tax commission members and high-tech business members. Among other provisions, the plan extended the current three-year moratorium on new Internet taxes to five years. The plan received a vote of 11-1, with seven abstentions, and failed to reach the 13 votes or more ``super majority'' required to make a formal recommendation to Congress.

A teleconference of the advisory panel has been set for today to review the language of the report and see if any votes will swing over to the majority proposal.

Gephardt said it is unfair to require Internet sellers to run the gauntlet of thousands of state and local tax jurisdictions, and as a result, the moratorium, due to expire in October 2001, needs to be extended while a consensus developed on how states can enact sales tax simplification

However, in remarks prepared for an address to high-tech groups, including the Northern Virginia Technology Council, Gephardt said "an additional five years is an eternity in Internet time. I would support extending the moratorium until October 2003.''

The growing share of online retailing worries many states, cities and other localities that depend on sales tax revenues to pay for services ranging from schools to ambulances. Internet champions , on the other hand, say that the web of sales taxes across the country would be prohibitively expensive to calculate and collect.

The majority advisory commission plan would extend the existing moratorium on new Internet access taxes for five years, and calls for elimination of existing Internet access taxes and axing a 3 percent federal tax on telecommunications. Gephardt said he supported phasing out the telecom excise tax that was put in place 102 years ago to help finance the Spanish-American War.

It would also exempt from taxation anything sold on the Internet in digital form, such as downloadable computer software, an electronic book or musical recording and ``tangible'' equivalents like books, compact discs and movies.

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