Newspaper article THE JOURNAL RECORD

Federal Panel Recommends E-Tax Ban

Newspaper article THE JOURNAL RECORD

Federal Panel Recommends E-Tax Ban

Article excerpt

DALLAS -- Congress should permanently ban taxes on access to the Internet and repeal a century-old telephone tax, and lawmakers should refrain for now from trying to apply state sales taxes to purchases online, a federal e-commerce panel decided Monday.

A majority of the 19-member Advisory Commission on Electronic Commerce endorsed a proposal from its business members that also would extend by five years a moratorium expiring in October 2001 on new Internet taxes. The proposal also would encourage state and local governments to simplify their sales tax systems.

"This is definitely a no-new-taxes-on-the-Internet proposal, but it's not a no-sales-taxes-ever proposal," said David Pottruck, president of Charles Schwab. "It's a starting point."

The proposal also asks Congress to define what the Supreme Court meant in a 1993 ruling that requires a business based outside a state's borders to have a physical presence, or "nexus," in the state before the state can collect sales taxes on the business sales in the state.

The plan suggests that such things as Internet service providers and World Wide Web pages should never be considered a physical presence.

Several state and local government representatives on the panel objected to that section and to language exempting sale of digital products such as books and music, as well as their physical counterparts sold in stores.

Dallas Mayor Ron Kirk, a Democrat, called that "a huge money grab for the business members of this commission." The panel includes top executives of AT&T, America Online, Time Warner and MCI Worldcom.

"I don't think business is at all grabbing for money," responded Robert Pittman, president and chief operating officer at AOL. "It's less about taxes than it is about where you deploy your resources."

The decision marked a defeat for most of the state and local officials on the commission, who wanted a clear statement supporting equal sales tax application to goods sold in stores or via the Internet. …

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