A controversial Internet tax report by the Advisory Commission on Electronic Commerce was formally presented to Congress last month amid strong criticism by most of the nation’s governors and state lawmakers.
The commission chairman, Gov. James A. Gilmore III (R-VA), officially handed the report of the deeply divided panel to House Speaker J. Dennis Hastert (R-IL) and Senate Majority Leader Trent Lott (R-MS) at a brief ceremony in the Lincoln Room of the Capitol.
Extending the Moratorium
The report recommended that Congress extend the current moratorium on new Internet taxes, scheduled to expire in October 2002, by five years. It also proposed a repeal of the century-old 3% federal excise tax on telecommunications and the appointment of an advisory panel to develop standards to simplify state and local tax systems.
The report was approved by a simple majority instead of the required “super majority” of commission members.
Governors Assail Report
Received without comment by Hastert and Lott, the report was denounced by the National Governors Association in a letter delivered and signed by 36 of the 50 governors. The governors urged rejection of the report and accused the commission of ignoring the constitutional rights of states to independently raise revenue.
In other news, Sens. Judd Gregg (R-NH) and Herb Kohl (D-WI) introduced legislation to prevent states from forcing out-of-state businesses without a physical presence within their borders to collect taxes on mail order or Internet sales.
The New Economy Tax Simplification Act, they said “will keep the Internet from being pecked to death by a thousand chickens looking to assess taxes against it.”
A Rival Measure
Meanwhile, Sen. Bryan L. Dorgan (D-ND) said he is preparing a rival measure that would pave the way for states to eventually collect taxes on mail order and Internet sales by requiring state tax systems to be simplified and unified.
“This is not an issue that turns on whether you support or do not support a tax,” Dorgan said.
“Instead, Congress needs to find a mechanism for allowing people to pay a tax that they already owe,” he explained.
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