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Senators Introduce Net-Tax Ban Bill, DMA Objects

Three senators have moved to extend a ban on Internet-specific taxes in the short term while giving lawmakers an opportunity in two years to consider a long-term approach to the taxation of Internet commerce.

Sens. Ron Wyden, D-OR; John McCain, R-AZ; and Patrick Leahy, D-VT; introduced legislation Tuesday to extend by two years the moratorium on discriminatory taxes levied against Internet commerce. Given the pressing priorities facing Congress after the Sept. 11 terrorist attacks, the senators said, the legislation was proposed to extend the moratorium temporarily while giving lawmakers a chance in two years to consider a long-term approach.

The moratorium, a product of the Internet Tax Freedom Act enacted in 1998, is set to expire Oct. 21.

The legislation introduced by Wyden, McCain and Leahy will be referred to the Commerce Committee. A House bill will next be taken up by the Judiciary Committee.

Also on Oct. 2, the Direct Marketing Association voiced its opposition to the Senate bill, saying it inappropriately links two unrelated issues.

The DMA said the proposal jeopardizes the passage of the Internet access-tax moratorium by coupling it with language about remote sales taxes, on which no consensus exists. Any discussion of the sales-tax issue should be saved for when there is no pressure of a deadline.

“It is simply bad timing and bad policy to ram through language about which there is no consensus in a bill that means to extend a moratorium that is critical for the health of remote commerce,” said H. Robert Wientzen, president/CEO of the DMA.

“Saddling a popular and needed piece of legislation with unresolved issues cripples its chances of passage,” said Jerry Cerasale, the DMA's senior vice president, government affairs. “We support an extension of the moratorium while Congress separately continues to work out a practical way to substantially simplify the more than 7,600 varying sales-tax codes.”

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