*Group Chooses Tax on DMers Rather Than Sellers of Books, Music

Internet sales taxes should go to direct marketers, but not to online sellers of books and music, according to a group of e-commerce companies that are part of a federal Advisory Commission on Electronic Commerce.

The proposal, which was made public yesterday following its presentation to the commission late Tuesday evening, essentially jettisoned all taxation of books, music and other related entertainment products in exchange for business leaders’ agreement to accept the introduction of new state sales taxes on direct mail-oriented commerce.

Such a proposal is sure to raise the ire of traditional direct marketers who see the process being manipulated by potentially new competitors within the global economy. And to be sure, the proposal, which generated mixed reactions from consumer groups and business advocates alike, was part of an effort to quell heated rhetoric and political grandstanding between pro- and anti-tax advocates from Washington to Silicon Valley.

Charles Schwab Corp, .New York and America Online Inc., Vienna, VA are reportedly in the lead to organizing what the group is terming a compromise. MCI Worldcom Inc, AT&T Corp., Time Warner Inc., and Gateway Inc. were also involved in the report’s language as well. But companies took great pains to characterize the proposal as merely a first step toward developing a more comprehensive policy.

Currently, out-of-state firms are limited in their ability to collect a local tax for on goods sold and shipped across state lines.

The Wall Street Journal reported that “The proposal makes it possible to envision scenarios under which the 19-member panel could muster the required 13 votes for passage of a recommendation to Congress,” according to advocates.

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