OT> U.S. Senate votes historic ban on taxing cyberspace
October 12, 1998 WASHINGTON (Reuters) - Reuters [BR] via
NewsEdge Corporation : The Senate
Thursday approved landmark legislation to
keep the taxman out of cyberspace for three
years, a move President Clinton said will
sustain America's world lead in the
information age. Senators voted 96-2 for the
Internet Tax Freedom Act, which would bar
states and towns from enacting new taxes
aimed at Internet users for three years, until
a commission studies the matter and issues
recommendations.
It would be forbidden, for example, for a city
or state to levy a specific surcharge only on
Internet purchases, or to pass a special tax
on the purchase of an Internet service, bill
sponsors said. Recent studies show Web
commerce will total hundreds of billions of
dollars in the early 2000s.
''This is a major victory,'' Senator Ron
Wyden, the Oregon Democrat who originated
the bill, said.
''The Senate made it clear that we support
the millions of people who use the Internet,
and recognize that this is the business
infrastructure of the 21st Century,'' Wyden
said.
A similar version of the measure cleared the
House earlier this year.
Clinton said: ''I look forward to signing this
legislation into law so that America can
continue to lead the world in the Information
Age.''
But he said a final solution must balance the
needs of both Internet users and of the
cities and states that depend on tax
revenues to finance schools, highways and
other key projects.
''We cannot allow 30,000 state and local
tax jurisdictions to stifle the Internet, nor
can we allow erosion of the revenue that
state and local governments need to fight
crime and invest in education,'' Clinton said.
Frank Kelly, vice president of government
affairs for Charles Schwab & Co., which has
approximately two million on-line customers,
lauded the Senate action.
''The vote sent a clear signal to the states,
as well as other nations, that America's
online economy should continue to grow
unfettered,'' said Kelly, who represents the
Internet Tax Fairness Coalition, a group of
high-tech firms.
But software vendors were disappointed by a
last-minute compromise Wednesday that
excluded ''digitally delivered products'' from
the moratorium.
''Overall, it's a good bill,'' Jon Englund,
senior vice president of the Information
Technology Association of American, said.
''(But) we were disappointed that digitally
delivered products was not part of the
definition.''
Sen. John McCain, chairman of the powerful
Senate Commerce Committee, said the bill
''could determine the fate of electronic
commerce.'' He said by year's end an
estimated 100 million Internet users will be
connected worldwide.
House and Senate negotiators are expected
to meet shortly to work out differences in
their bills and then send it to Clinton for
signature.
Wyden's bill calls for a three-year timeout on
taxes on Internet access charges, such as
the roughly $20 that many Americans pay
monthly to AT&T, America Online, and similar
services.
It also bars, at least for now, certain new
multiple or ''discriminatory'' taxes that target
the Net, such as Web-search taxes, ''bit''
taxes, and e-mail surcharges.
Final bill wording was hammered out in tense
talks by key senators late Wednesday after
a week of on-again, off-again Senate votes
on the cyberbill.
One amendment, adopted 98-1 on
Wednesday, is designed to protect children
from Internet pornography.
Under the provision, porn sites could be
accessed only by credit card, personal
identification number, or similar means if
site-operators want to avoid new state and
local taxes.
A report released by International Data Corp.
in August said the amount of commerce
conducted over the Web will reach more
than $400 billion by 2002, reflecting a
1997-2002 compound annual growth rate of
103 percent. REUTERS@ |
