Washington, DC – Internet tax legislation co-authored by Senator Ron Wyden (D-Ore.) and Rep. Christopher Cox (R-CA), Chairman of the House Policy Committee and the House Homeland Security Committee, made progress in both the House and the Senate today.

The Senate Commerce, Science and Transportation Committee, of which Wyden is a member, held a hearing this morning on the issue of Internet taxation and on Wyden’s legislation to make permanent the existing Cox-Wyden moratorium on discriminatory Internet taxes. At the hearing, witnesses expressed strong support for the permanent ban on unfair Internet taxes, and for keeping the issue separate from the states’ “streamlined sales tax” efforts. Rep. Cox’s companion legislation to the Wyden bill was reported to the full House by the Judiciary Committee today. A vote on the House floor and action in the Senate Commerce Committee are expected soon.

The current Cox-Wyden moratorium on unfair Internet taxes – including taxes on Internet access, multiple-state taxation of a single item bought online, and discriminatory taxes that treat Internet purchases differently than other types of sales – is set to expire in November of this year. Wyden and Cox are seeking to extend the ban indefinitely, to protect Internet access and e-commerce.

“The moratorium on discriminatory and multiple Internet taxes has been in place for five years and has a well-known track record – there’s no reason not to make it permanent,” said Wyden. “In all this time there has not been a single case in which a state or locality has come forward with evidence showing damage caused by the inability to impose discriminatory or multiple taxes on the Internet.”

“Today we are one step closer to permanently ensuring that Americans are free from new taxes on their email and Internet access,” said Chairman Cox. “New taxes discriminating against Internet users would be unfair to our economy and our society. It is time to permanently ban them.”

The ban on discriminatory Internet taxes keeps thousands of states and localities from forcing Internet entrepreneurs to serve as tax collectors for faraway governments. Under the Supreme Court’s 1992 Quill decision, such a responsibility would constitute an “undue burden” for those entrepreneurs that would endanger their ability to remain in business. Oregon entrepreneurs have spoken out in support of the ban on discriminatory taxes and for Wyden’s efforts to make the ban permanent.

“I couldn't possibly collect and remit taxes for nearly 8,000 state and local governments AND manage to stay in business at the same time,” said Susan Otcenas of Hillsboro's TeamEstrogen.com, which retails women's cycling apparel online. “This law allows me to operate just like any other retail business; collecting the sales taxes for the state in which I am located and continuing to leave it the responsibility of my customers to be law-abiding citizens and pay their own taxes when due.”

According to today’s testimony, an estimated 62 million American households have Internet access, and already pay taxes on the cable or phone lines that carry their Internet service. Additional taxes on Internet access would amount to double taxation, and would further raise the cost barriers to Internet access for millions of Americans who do not yet have it. While the Cox-Wyden legislation bans multiple and discriminatory taxes on the Internet, it does not address the issue of sales taxes on e-commerce. That controversial issue, considered separate from the ban on Internet-only taxes that is the subject of the existing Cox-Wyden moratorium, is currently under debate.

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