Just say no taxes
Keeping the internet a tax-free zone has no trouble attracting backers. When Congress extended the tax moratorium last year, the bill passed 352-75. Those supporting the tax moratorium argue that Internet commerce is still a new phenomenon, and taxing it now could damage e-business for some time to come.
One of the key arguments against taxing Internet commerce is the myriad of local tax jurisdictions and lack of standards that make collections a nightmare. Cox, in testifying for the extension in June, cited several examples of local jurisdictions with discriminatory or overly complex taxes:
– The city of Tacoma, Washington required Internet service providers (ISPs) to pay a 6 percent gross receipts tax, even if they were national companies with no employees in the city. Tacoma also tried to collect an annual business license fee from companies that sold products to city residents, no matter where they were located, even outside the U.S.
– The state of Alabama considered ISPs public utilities and tried to collect gross receipts taxes similar to those levied against telephone and water companies.
– Florida imposed a tax on Internet access and an additional statewide tax on gross receipts from online sales. The state also enabled local communities to levy additional telephone fees on Internet access.
– Different states define Internet access as different kinds of telecommunications or commercial services, and tax these services at different rates, making collections difficult for ISPs
Too often, said Cox, state and local governments see the Internet as too inviting a target, and pile on taxes at different levels of government, or single out e-business for discriminatory treatment.
The Internet Tax Nondiscrimination Act provides a good case study of how the issue cuts across party and ideological boundaries. Ron Wyden, a liberal Democratic senator from Oregon has sponsored this same legislation in the Senate, and backing it as enthusiastically as Cox, a conservative Republican.
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