WASHINGTON -- Congress may not settle the issue of how state sales taxes should apply to electronic commerce, but there's broad support for legislation permanently banning new state or local taxes that single out the Internet.
The bill's main sponsors, Sen. Ron Wyden, D-Ore., and Rep. Christopher Cox, R-Calif., said people on both sides of the debate agree the current three-year ban on new Internet taxes should be extended indefinitely."Our bill simply says you can't stick it to the online world," Wyden said Thursday. "We shouldn't discriminate against the most vibrant part of the economy."
The law enacting the temporary ban, which expires in October 2001, also created a congressional commission to recommend future tax policy for the Internet. Its report is due in April, and both Wyden and Cox said they expected one recommendation would be an extension of the ban on new taxes.
"The current hands-off tax policy is working," Cox said.
It is unlikely, however, that the advisory panel will reach consensus on how existing state sales taxes are collected from Internet purchases. Even if it did, Congress is reluctant to try to overturn a Supreme Court decision requiring a remote seller -- catalog, Internet or otherwise -- to have a physical presence in a state before that state can force it to collect and remit sales taxes.
Some -- not all -- Internet merchants charge sales tax to their electronic customers, but there is widespread confusion over which businesses must charge which customers, and some states believe they are not receiving all the tax revenue they are entitled to receive.
In testimony this week, Michigan Gov. John Engler, a proponent of a new system to collect sales taxes from the Internet, agreed that other taxes should be banned on such things as Internet access.
"We should not impose new surcharges or access fees to this emerging technology," Engler told the Senate Budget Committee.
Several members of Congress are pushing a bill that would also permanently ban states from imposing sales taxes on e-commerce, but others prefer waiting.