House Speaker: Extend Internet Tax Moratorium

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House Speaker Dennis Hastert, R-IL, is backing a congressional extension of the Internet tax moratorium beyond October, when it is scheduled to end.

The moratorium is part of the Internet Tax Freedom Act, which was signed into law Oct. 21, 1998, and imposed a ban on new state and local Internet taxes until October 2001.

Hastert, speaking at the Comdex Chicago Public Policy Forum earlier this month, said Congress needs to protect the hi-tech sector from the effects of the economic slowdown.

"Let me start off by saying I'm bullish when it comes to the technology economy," Hastert said. "While headlines have our economy headed for trouble, I think it's the technology sector that's going to keep the economy strong."

However, he said legislators want to do their part "to see that our new economy has the opportunity to grow. I think we successfully managed to do that three years ago by enacting a moratorium on Internet taxes. By keeping the Internet free of discriminatory taxes, we have encouraged companies and consumers to do their business in the electronic marketplace."

Hastert's support for an extension of the moratorium means the issue is likely to receive significant attention over the next six months.

Other lawmakers also would like to see a moratorium extension.

In February, Rep. Christopher Cox, R-CA, and Sen. Ron Wyden, D-OR, introduced the Internet Non-Discrimination Act, which would extend the moratorium for five years and would make the ban on Internet access taxes permanent.

However, the legislation also would create a set of tax simplification criteria that state and local authorities could use to implement less burdensome tax collection systems for remote sales such as Internet and catalog transactions. Once a sufficient number of states have simplified collection, Congress would work on an expedited basis to codify the new system.

According to the congressmen, the bill would protect consumers by giving states and localities a blueprint of fair, constitutional ways to simplify tax collection and promising quick consideration by Congress when proposals are made. States would be able to present their plans to Congress at any time.

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