House Votes to Extend Net Sales Taxes Moratorium

WASHINGTON (05/10/2000) - The U.S. House of Representatives overwhelmingly passed a bill today that would extend the moratorium on electronic commerce sales taxes by five years.

Under the proposal, the moratorium, which was imposed in 1998 and expires in October 2001, would be extended to October 2006. The Republican Party leadership rammed the Internet Non-Discrimination Act through the House with no hearings and little debate as part of its new eContract 2000, a series of written pledges designed to curry favor with high-tech campaign contributors in the 2000 election season. Some Democrats decried the bill as unnecessarily premature, but in the end, most of them helped Republicans pass the bill on a 352-75 vote.

Representative Lloyd Doggett, Democrat, Texas, accused the Republican Party of rushing the bill through in order to "drive a wedge between the New Economy -- the high-tech economy -- and the Democratic Party."

The 1998 Internet Tax Freedom Act establishing the current moratorium also created a blue-ribbon advisory commission to study the issue. The commission held four high-profile meetings across the country before deadlocking in late March. The commission's final report to U.S. Congress included no official recommendations other than calls for respecting Internet consumer privacy, bridging the digital divide and banning international e-commerce tariffs. A simple majority of the commission recommended that Congress extend the moratorium for five years.

"A bill this important and this controversial deserves more careful deliberation than the House is offering," says Representative Tony Hall, Democrat, Ohio.

Nevertheless, the Republicans turned aside an amendment offered by Representative William Delahunt, Democrat, Massachusetts, which would have extended the moratorium for only two years. Representative Steve Chabot, Republican, Ohio, countered Delahunt's amendment by offering his own amendment that would extend the moratorium for 99 years. Both amendments failed, as did a motion by Representative John Conyers, Democrat, Michigan, to recommit the bill to the House Judiciary Committee.

The bill also would repeal a grandfather clause in the 1998 bill that allows some states to tax Internet access.

The White House issued a statement supporting a permanent moratorium but opposing a five-year temporary extension. The administration said the bill "will delay consideration of important Internet tax issues and will hinder, not foster, tax simplification efforts by the states."

Senator Ron Wyden, Democrat, Oregon, a champion of permanently banning e-commerce sales taxes, is circulating a compromise legislative proposal among his Senate colleagues that also would extend the moratorium until 2006.

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