Internet Tax Moratorium Bill Introduced

A bipartisan group of House and Senate lawmakers reintroduced legislation Thursday to extend for five more years a moratorium on “discriminatory” Internet taxes.

The bill, unveiled by Sen. Ron Wyden (D-Ore.) and Rep. Christopher Cox (R-Newport Beach), is similar to a measure that cleared the House 352 to 75 last year but stalled in the Senate.

The current moratorium on new Internet taxes and Web access charges is set to expire in October. It was passed in 1998 to support the commercial growth of the Internet.

The latest bill would prevent discriminatory taxing of e-commerce or any taxes that treat online business differently from traditional businesses, prevent imposition of multiple taxes on the same online transaction and apply a permanent ban to Internet access taxes.

Some states and localities fear they will lose sales tax revenues as businesses shift sales online, but Internet supporters say it would be impossible for online businesses to comply with thousands of local sale taxes.

Last month, a coalition of U.S. states unanimously approved a plan to simplify their sales tax codes, with an eye to eventually capturing revenue from Internet and catalog sales.

The Cox-Wyden bill would require Congress to approve or reject the states’ plan without modification as an incentive for quick action.

“We want to extend an olive branch to the states. If they simplify their tax systems, they will get a clean vote on the issue in Congress,” Wyden told a news conference.

If enough states simplify and unify their sales and use-tax systems, then Congress should consider authorizing those states to require sellers to collect taxes on goods delivered in-state, the bill says.

But Wyden said there is no evidence to prove the states have lost revenue due to the current moratorium.