Coalition, congressmen push for tax-free Internet By John Moore, Sm@rt Reseller November 10, 1999 1:46 PM ET http://www.zdnet.com/pcweek/stories/news/0,4153,2391332,00.html WASHINGTON -- A coalition of antitax organizations -- backed by two congressmen -- on Wednesday unveiled a plan for keeping the Internet and electronic commerce tax-free. The e-Freedom Coalition, a collection of more than 20 taxpayer, consumer and public-policy think tanks, is aiming its proposal at the federal Advisory Commission on Electronic Commerce. Some industry and taxpayer groups believe the commission, established to advise Congress on Internet tax policy, has shifted the debate from whether to tax the Internet to how to levy taxes. Joining coalition members at a press conference here were Rep. John Kasich (R.-Ohio) and Rep. John Boehner (R.-Ohio), who this week introduced a bill to ban Internet sales taxes. The Internet Tax Elimination Act (H.R. 3252) would make permanent the moratorium on Internet-access taxes established last year under the Internet Tax Freedom Act. That current moratorium is set to expire in October 2001. The Kasich/Boehner bill would also bar "discriminatory" taxes levied on transactions solely because they involve e-commerce. "These technologies have been able to flourish because the government never really understood them," Kasich said. Now, he said, politicians are "licking their chops at the notion that [they] need to regulate and tax and control. I think they see the Internet as a big cash cow." Boehner said it is critical to "let the new economy grow without the interference of government." He called the Internet "the last bastion of economic freedom in America." The e-Freedom Coalition plan, meanwhile, targets not only the Internet but also general telecommunications taxes. The plan calls for: * The immediate repeal of the 3 percent federal excise tax on telecommunications. * The elimination of access fees charged to telecommunications companies for installing cable along public rights of way. The proposal says state and local governments should be reimbursed only for the actual costs of managing rights of way. * A permanent extension of the current federal ban on Internet-access taxes. The coalition proposal, noted Adam Thierer, a fellow with the Heritage Foundation, also emphasizes the need to create a "clear and unambiguous" standard for what constitutes a nexus -- a substantial physical presence that would require a seller to collect sales tax. To date, Supreme Court decisions regarding remote sales hold that sellers are required to collect sales taxes when they are based in the buyer's state or have a physical presence in a buyer's state. E-commerce, however, has introduced such questions as whether a Web server or ISP supporting an online merchant represents a substantial physical presence. The Advisory Commission on Electronic Commerce is expected to take up some of those issues at its next meeting, which is scheduled for Dec. 14-15 in San Francisco. E-Freedom Coalition members include the Heritage Foundation, Americans for Tax Reform and Citizens Against Government Waste.
