The Advisory Commission on Electronic Commerce, deeply divided over taxing Internet sales, approved a resolution recommending Congress extend the existing moratorium on new Internet taxes by five years. The vote was 11-1, with seven abstentions.
The moratorium is currently scheduled to expire in October 2002.
Congress appointed the panel last year to advise it on how to deal with the Internet and taxes. The panel, holding its final meeting in Dallas, is scheduled to file its recommendations with Congress in late April.
Monday, the majority, led by Virginia Republican Gov. James A. Gilmore III, approved a resolution recommending that Congress adopt legislation expanding a 1992 decision by the U.S. Supreme Court prohibiting states from taxing mail order sales unless the seller has a physical presence in the state to include Internet and telephone sales.
The vote marked a defeat for the panel’s minority led Utah Republican Gov. Mike Leavitt. Those state and local officials wanted a clear statement to Congress from the panel supporting taxation of Internet and mail-order sales in the same manner as over-the-counter sales.
The resolution also calls for exempting Internet service providers and operators of pages on the World Wide Web from taxes.
Other resolutions approved by a simple majority instead of the required “super majority of 13,” include recommendations for: a permanent ban on any taxes on Internet access; a repeal of the 102-year-old 3% telephone excise tax; exempting digital products such as books and music sold over-the-counter and the Internet from being taxed; and encouraging a simplification of the patchwork of state and local sales taxes leading to one uniform rate across the nation.
The latter recommendation was endorsed by Deputy Commerce Secretary Stuart Eizenstat. Speaking at the Tax Executives Institute mid-year conference in Washington, Eizenstat, said “the current network of sales taxes is too diverse and complicated [and should be] simplified.”
“From what I can see, it looks like these are all things that we could support,” said Jerry Cerasale, the Direct Marketing Association’s senior vice president, government affairs.
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