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Wyden, Cox Bill Would Indefinitely Extend Moratorium on Unfair Internet Taxes
Bipartisan legislation bans unfair taxes that threaten online business

January 8, 2003

 
     
  Washington, DC -- U.S. Senator Ron Wyden (D-Ore.) and Representative Christopher Cox (R-Calif.) have introduced legislation to indefinitely extend the existing moratorium on new and discriminatory Internet taxes. The current Cox-Wyden law, authored by Sen. Wyden and Rep. Cox and titled the Internet Tax Freedom Act (ITFA), prohibits three types of taxes that unfairly single out the Internet. These include taxes on Internet access, double taxation (for example, by two or more states) of a product or service bought over the Internet, and discriminatory taxes that treat Internet purchases differently from other types of sales. In addition to authoring the original law, Sen. Wyden and Rep. Cox also wrote the Internet Tax Non-Discrimination Act, legislation that extends the moratorium until November of this year.

"Putting new, unfair Internet taxes on the backs of consumers is not the way to fix state and local budget troubles. It could seriously weaken the growing Internet economy and take jobs away from folks working for small web companies," Wyden said. "Rep. Cox and I want to make sure that Internet access and Internet commerce are never subject to arbitrary or discriminatory tax schemes."

"Since 1998 when the Cox-Wyden bill first became law, we have had ample time to evaluate the effects of the moratorium on internet taxes and on the growth of the online economy in general and e-commerce in particular," Rep. Cox said. "Given the continued softness in the tech economy, this is hardly the time for new taxes on the Internet. Rather, providing long-term certainty about tax policy is one of the necessary ingredients for a tech rebound."

In 1992, the U.S. Supreme Court reaffirmed a previous ruling that the nation's 7,600 tax jurisdictions could not impose sales tax collection burdens on out-of-state sellers if the seller has no "nexus," or physical presence, in the taxing jurisdiction. Since enactment of

ITFA, which applies the Supreme Court rulings to Internet sales, online consumers have been threatened by a growing number of tax schemes proposed for implementation as soon as the ban expired. Those schemes range 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 indefinitely will protect consumers by making sure e-tailers are to be treated equally with other businesses.

This legislation is the latest in a long, bipartisan partnership between Sen. Wyden and Rep. Cox on Internet issues. In 1995, the two first collaborated on a bill promoting private sector solutions to online pornography problems. In addition to ITFA and legislation to extend it by two years, Rep. Cox and Sen. Wyden also wrote legislation to extend the 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.

The legislation to indefinitely extend the moratorium will be considered by the Commerce Committee in the Senate, and by the Energy and Commerce Committee and the Judiciary Committee in the House of Representatives.


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