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The Battle Over Taxing Internet Shopping

Added: (Thu Nov 25 1999)

Pressbox (Press Release) - By Ann Compton

WASHINGTON - When Christmas shopping gets its traditional kickoff on Friday, the day after Thanksgiving, Americans pawing their way through malls will be paying a sales tax on every package they carry home from stores in the 42 states that collect sales taxes.

There's no such tax in the multibillion-dollar marketplace on the Internet, where a new ABCNEWS.com poll predicts 22 million more Americans will shop this season. It won't have any sales tax this Christmas or during the three-year national moratorium on Internet taxes that has already been in place for its first year.

Taxing Your Patience
Starting next week, however, some important people will begin making decisions on whether you eventually will pay taxes - and the stakes are enormous.

The Advisory Commission on Electronic Commerce, a group of political and business leaders, is already split down the middle. The government commission will be meeting meets in San Francisco in mid-December for further study.

In one corner, its Chairman, Virginia Gov. Jim Gilmore, says read his lips, no new taxes. Gilmore wants to keep the Internet free of any taxes - permanently - in the name of truly free enterprise.

But some other governors and mayors, led by Utah's Gov. Mike Leavitt, say Internet sales taxes would bring in hundreds of millions of dollars that the states deserve and need.

Leavitt has proposed the "Streamlined Sales Tax System" in the name of fairness, saying Internet sales could be taxed locally on a par with catalogue and telephone orders. Some are even suggesting that such Internet taxes should be voluntary at first. Others insist that only the federal government has the authority to tax interstate commerce.

Global Greed
On the global scene, it's crunch time for taxes next week, as the World Trade Organization gathers in Seattle. Just like state governors, the leaders of poor, developing nations see Internet sales as a gold mine that is rightly theirs.

One startling consideration suggested by the United Nations: whether information transferred between countries might be subject to a "bit tax" on every byte of digital data passed in and out of a country.

Forget the fact that enforcement in any of these is something incomprehensible for most governments at the moment.

The Advisory Commission on Electronic Commerce Web site is accepting recommendations and the final report is due next April.

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