Votes on Phone, Net Taxes Planned

Congress will vote this year on repealing the 102-year-old telephone tax, extending a moratorium on new Internet taxes beyond 2001 and permanently banning taxes on charges for Internet access, House Speaker Dennis J. Hastert says.

In a draft speech to be delivered Monday in Chicago, the Illinois Republican said the votes will underscore Republicans as prime supporters of tax relief and electronic commerce. House Minority Leader Richard A. Gephardt (D-Mo.) recently spoke in favor of a similar approach as both parties jockey for support in the high-tech industry.

The speaker’s remarks were circulated on Capitol Hill on Friday shortly after some of the nation’s biggest retailers, joined by state and local government officials and sympathetic members of Congress, said lawmakers should reject a federal e-commerce commission report they say backs tax breaks to business and could lead to a permanent sales tax exemption for the Internet.

Executives from Target, Wal-Mart, RadioShack, J.C. Penney and Circuit City appeared on Capitol Hill with government officials to criticize the Advisory Commission on Electronic Commerce majority report as unfair to traditional retailers. They described it as a potential threat to billions of dollars in state and local sales tax collections that pay for schools, roads, police and fire protection.

The commission, created by Congress to recommend future e-commerce tax policy, failed to reach the necessary two-thirds vote for formal recommendations on most key points. But its six business members, joined by anti-tax members, won majority approval of proposals to extend a moratorium on new Internet taxes for an additional five years after it expires next year.

Republican leaders on Capitol Hill already are moving legislation that mirrors many of the commission’s majority proposals. Senate Commerce Committee Chairman John McCain (R-Ariz.) plans votes next week on his bill to extend the moratorium on new taxes through 2006, and support is building for repealing the 3% telephone tax and for a permanent ban on taxes on Internet access.