DALLAS–The Advisory Commission on Electronic Commerce failed yesterday to come up with the super majority vote required to present a formal recommendation to Congress on how the Internet should be taxed. The members expect to participate in a teleconference in the next week to continue talks for a possible compromise.
The 19-member commission — which consists of representatives from industry and consumer groups and representatives from state, local and federal government — was appointed by Congress in 1998 as part of the Internet Freedom Act to study the impact of federal, state, local and international taxation and tariffs using the Internet and Internet access. The commission's recommendations must be presented to Congress by April 21. Currently, there is a three-year moratorium on new, special and discriminatory taxes. Sticking points concerned state sales taxes and how e-commerce businesses are defined for state tax purposes.
The commission voted 11-1 Monday night in favor of a compromise proposal recommending Congress to enact legislation to extend the current moratorium for five years and prohibit taxation of digitized goods and products and their non-digitized counterparts. Seven members abstained, including three members from the White House administration, Utah Gov. Michael Leavitt and Washington Gov. Gary Locke. Dallas Mayor Ron Kirk cast the lone dissenting vote.
“The business proposal does not represent a consensus of all business communities, including Main Street retailers,” member Robert Pincus, general counsel for the Commerce Department, said at a press conference afterward explaining why he abstained. “Many senators, governors and state representatives opposed it.”
However, under the Internet Tax Freedom Act, the commission can send a report to Congress that a majority — but not the super majority — voted in favor of the compromise.