Congress: Sales Tax? What Sales Tax?

May 11 2000

All those headlines screaming about a Net tax moratorium might make you think Congress has settled the issue. Au contraire, mon frere. The five-year moratorium passed by Congress on Wednesday only bars U.S. states from putting new taxes or fees on Internet use, such as taxing monthly ISP fees.

Though Reuters conflated the two issues, other outlets agreed that the e-commerce sales tax debate has been set aside for now. Because of that, "ome lawmakers said the measure may have more symbolic than substantive importance," said the Washington Post. The AP noted that "Although the moratorium doesn't directly affect sales taxes, opponents say it could effectively put the issue off for too long." Continuing to blow off the state sales tax issue supports the status quo, and we all know the line on that: Tax-free e-commerce hurts brick-and-mortar retailers and deprives state and local governments of revenue.

Many journalists identified the moratorium as Congress' way of sending flowers to the high-tech industry. As the Washington Post put it, this bipartisan vote showed that "both parties are willing to set aside their differences when it comes to placating the industry's top executives." The Post said Democrats "feared opposing the bill and handing their GOP opponents an issue." The Senate might be another story; both parties have their doubts about the moratorium's future there. Plus, the White House would rather have a two-year moratorium, and Clinton has threatened a veto.

Regardless of the moratorium's fate, it ought to be interesting to watch politicians kiss up to the tech biz for the rest of the election year. House Republicans have already released "e-Contract 2000," the sequel to the 1994 stand-up comic fodder, "Contract With America." The San Jose Mercury News outlined other issues on the congressional agenda, such as increasing the annual number of visas for foreign techies, extending normal trade relations with China, and making digital signatures legally binding. Also, be on the lookout for legislation "to eliminate the 3 percent federal tax on every phone bill that was enacted 102 years ago to help fund the Spanish-American War," said the Merc.

Okay, so maybe Americans will have to pay taxes on our Amazon purchases someday. That's not such a big deal once you realize we're still paying for Teddy Roosevelt to charge San Juan Hill. - Jen Muehlbauer

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