New Bill Extends Internet Tax Moratorium

Rep. Christopher Cox, R-CA, and Sen. Ron Wyden, D-OR, introduced legislation yesterday that would extend the moratorium on new Internet taxes for five years and would make the ban on Internet access taxes permanent.

The moratorium on new Internet taxes is scheduled to expire in October. Additional provisions in the Senate version of the bill would help states and localities streamline tax collection to avoid burdening the e-commerce sector, according to the congressmen.

The legislation, called the Internet Non-Discrimination Act, 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 can present their plans to Congress at any time.

“This is about fairness,” Wyden said. “Chris and I want to continue the e-commerce boom we've gotten from our ban on discriminatory taxes and make sure Internet access is never subject to an arbitrary tax scheme.

“We also want to extend an olive branch to the states,” he said. “If they simplify their tax systems, they'll get a clean vote on that issue in Congress.”

The legislation introduced yesterday mirrors the recommendation of the U.S. Advisory Commission on Internet Tax and was endorsed by President Bush during his campaign.

AeA, formerly the American Electronics Association, commended Wyden and Cox for introducing the legislation.

In a letter to the congressmen, William T. Archey, president/CEO of AeA, said, “We applaud your efforts to keep the Internet free of the complex burdens imposed by the current U.S. sales and use tax administration system.”

If enacted, the legislation would become the fourth Internet-related bill co-authored by Cox and Wyden to become law. Previous Cox-Wyden enactments include the Internet Freedom and Family Empowerment Act in 1996, the Internet Tax Freedom Act in 1998 and the Global Internet Tax Freedom Act in 1999.

Cox is chairman of the House of Representatives Republican Policy Committee.

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