As expected, President Bush yesterday signed legislation into law renewing the expired Internet tax moratorium for two years through Nov. 1, 2003.
The moratorium, which began in 1998, expired on Oct. 21 after the Senate failed to act on a previously House approved bill renewing the moratorium. Rep. Christopher Cox (R-CA) sponsored the measure, known as the Internet Tax Non-Discrimination Act (HR-1552).
Nearly a month later, on Nov. 15, the Senate approved the measure in a voice vote after lengthy debate over the last minute move by Sen. Byron Dorgan (D-SC) to renew the moratorium only until next June.
Senate passage of the bill capped more than two years of House and Senate debate over whether to extend the ban on new state and local taxes on Internet sales and access or make it permanent as proposed in a series of bills which never passed despite numerous hearings and heated debates over them.
H. Robert Wientzen, the Direct Marketing Association's president/CEO, said in a statement issued shortly after the bill's final passage that renewing the moratorium "will ensure that e-commerce can continue to grow [and] go a long way to bridging the digital divide" between Internet direct marketers and brick-and-mortar retailers.
At the same time organizations representing the nation's governors and state lawmakers, which have been campaigning for several years for the authority to tax remote sales -whether by mail, over the telephone, Internet or other direct response methods - to recoup billions in lost sales and use tax revenues, said they supported renewal of the moratorium at this time only because of the September 11th terrorist attacks.
White House Press Secretary Ari Fleisher reported that the President said the moratorium will "ensure the growth of the Internet is not slowed by additional taxation and that holiday shoppers will not be burned by new taxes on their online purchases" when he signed the measure into law. Fleisher also said the President noted that Internet sales are expected to account for 15% of all holiday sales.
Minutes later Treasury Secretary Paul O'Neill said in a statement that the moratorium "will provide additional time to analyze the impact of e-commerce on local and state tax receipts, while ensuring that the growth of the Internet is not slowed by new or discriminatory taxes."
