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E-Commerce Tax Panel Looking for Compromise
1/31/00
Several members of Congress' Advisory Commission on Electronic Commerce (ACEC) are trying to find some sort of middle ground between the two opposing positions that other ACEC members have adopted, in hopes that the commission can reach a consensus before its March meeting in Dallas.
At one end of the spectrum is the position favored by ACEC Chairman James Gilmore, governor of Virginia: No taxes of any kind on Internet retail purchases. At the other end is the position supported by Utah Governor Michael Leavitt: Create a simple national system of sales taxes that would cover all retailers, both online and offline.
Other ACEC membersmainly those who happen to work for big companies such as America Online, Charles Schwab, and MCI WorldCombelieve they can work out an acceptable compromise between these two positions. According to Bloomberg News, part of the compromise being discussed now would involve extending the current federal moratorium on new Internet taxes by another five years in order to give Internet commerce a chance to grow and give lawmakers time to revamp the taxing system.
Opponents of Internet sales taxes claim that taxing e-commerce right now could suffocate the development of online business and that states and local governments haven't really lost any tax revenues to e-commerce. Not all states would agree with that, though. Pennsylvania just released a 1998-99 fiscal report showing a loss of $15.5 million in taxes related to consumer Internet purchases as well as another $500,000 drop due to replacement of tangible products with digital counterparts.
While Internet taxation has not yet emerged as a major issue in the presidential campaign, candidates may be reluctant to stand up in favor of e-commerce sales taxes. A new survey by @plan, a market research company specializing in consumer online behavior, showed that 70% of adult online users were against a national sales tax on goods purchased on the web. Respondents who said they are independents or registered Republicans were more likely to oppose such a tax than respondents who are Democrats.
Related Links:
- "E-Commerce Commission: When in Doubt, Do Nothing" (NACS, 12/17/99)
- "Groups Survey Consumers on Internet Sales Taxes" (NACS, 12/15/99)
- "ACEC to Consider 14 Internet Sales Tax Proposals" (NACS, 12/8/99)
- "NACS Presses for Equal Treatment on Web Sales Taxes" (NACS, 11/18/99)
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