Wyden, Cox Team Up to Introduce New Internet Tax Package Bipartisan Legislation Extends Ban on “Discriminatory” Taxes, Guides Localities in Streamlining Tax Systems

February 8, 2001

Washington, DC -- U.S. Senator Ron Wyden (D-Oregon) and Representative Christopher Cox (R-California) have joined forces once again to author landmark high-tech legislation. With the current moratorium on Internet taxes set to expire in October 2001, the bipartisan duo today introduced Cox-Wyden IV, their Internet tax package.

"This is about fairness," Wyden said. "Chris and I want to continue the e-commerce boom we've gotten from our ban on discriminatory taxes, and make sure Internet access is never subject to an arbitrary tax scheme. We also want to extend an olive branch to the states. If they simplify their tax systems, they'll get a clean vote on that issue in Congress."

Wyden and Cox's plan would extend by five years the current moratorium on new, "discriminatory" Internet taxes, and make permanent the ban on Internet access taxes. It would also help states and localities streamline tax collection processes to avoid imposing undue burdens on the growing e-commerce sector in the future.

Since the 1998 enactment of the Internet Tax Freedom Act (ITFA), which established the temporary moratorium on Net taxes, online consumers have been threatened by a growing number of tax schemes, ranging from an arbitrary hodge-podge of state and local sales and use taxes to the creation of a new "unified" Federal sales tax. Extending the ITFA ban will make sure e-tailers continue to be treated no more or less favorably than other businesses.

Cox-Wyden IV would protect consumers by giving states and localities a blueprint of fair, Constitutional ways to simplify tax collection -- and promising quick consideration by Congress of such plans when proposals are made. While specifying criteria to improve tax systems, Wyden and Cox are not dictating terms to the states, which can present their plans to Congress at any time.

In 1995, Wyden and Cox first collaborated on Cox-Wyden I – a bill to promote private sector solutions to online pornography problems. Wyden and Cox also authored Cox-Wyden II, the Internet Tax Freedom Act (ITFA), which imposed a three-year moratorium on discriminatory domestic Internet taxation. This bill, which was signed into law on October 21, 1998, created a national commission to examine how a tax system could be applied to e-commerce and the Internet. Cox-Wyden III extended this ban worldwide by directing the American delegation to the World Trade Organization (WTO) to make a permanent ban on global Internet tariffs and discriminatory taxing practices a priority at the November 1999 WTO Ministerial in Seattle.

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