|
Read My
Clicks: No Net Taxes by Paul A.
Greenberg on
11/19/99 of
E-Commerce
Times Topic:
Taxation, Press
Coverage |
I Everything that has
to do with e-commerce seems to move at record speed, except for one
thing: The decision whether to tax goods and services sold over the
Internet.
Somehow, the debate
over Internet taxes has dragged on for the better part of the year,
with the U.S. Congress' Advisory Commission on Electronic Commerce
taking its time when it comes to issuing a definite recommendation.
However, last week, Virginia
Governor and panel chairman James Gilmore came forth with his
strongest suggestion yet: No new taxes.
Whether his words will gather widespread support
remains to be seen. Some observers have questioned Gilmore's ability
to remain objective on the issue, since his state is home to the
world's most popular Internet access service, America Online.
Still, Gilmore is not the
only legislator suggesting a ban on Net taxes. Republican
presidential candidate John McCain proposed a ban on Internet taxes
as far back as September.
The
Great Tax Debate
On the
surface, it would appear that both sides in this argument have valid
points. Those in favor of taxes point to brick-and-mortar businesses
who they say will be at an unfair disadvantage in the marketplace if
their online counterparts are not held to the same standards of
taxation that they must honor.
Others counter that argument by reminding tax proponents that
many of those brick-and-mortar ventures sell some of their goods
through Internet Web sites as well. After all, they reason, that is
the beauty of the e-commerce revolution: Anybody can do business
online.
Supporters of
Internet taxes also suggest that Internet businesses have already
been given an unfair advantage with the Internet Tax Freedom Act,
passed by Congress last year. The Act imposed a three-year
moratorium on state and local sales taxes on retail e-commerce, as
well as on Internet access taxes.
Just last week, House Budget Committee chairman John Kasich
presented a plan to the Advisory Commission that would make the Tax
Freedom Act a permanent law.
Various civic voices are speaking up around the U.S.,
suggesting that a lack of Internet taxation is tantamount to
compromising essential city services. For example, Dallas, Texas
Mayor Ron Kirk, who serves on the Advisory Commission, fears that
local police, fire and other services may lose their funding if
Internet sales aren't taxed.
Unstoppable Revolution
Critics of Internet taxation claim that the culture has a
responsibility to allow the electronic commerce revolution to
happen. Every roadblock that is constructed that discourages online
business growth is ultimately to the detriment of all consumers,
they say.
They may have a
point. The U.S. Chamber of Commerce released a survey last week that
projects online retail sales to grow by upwards of 500 percent over
the next two years, which just happens to run concurrent with the
Internet Tax Freedom Act.
Douglas Graham, a partner with KPMG, the firm that conducted
the poll of 150 policy makers, company executives and association
heads, feels that "we are in a transitionary period right now, one
in which there is heightened interest in adopting fair policy."
With that concept in mind, it
is significant to note that more than three-fourths (76 percent) of
survey respondents said that for purposes of taxation, remote
electronic transactions should be treated the same as catalog sales.
Further, 56 percent thought a sensible legal, fiscal and regulatory
framework that minimized government regulation could be adopted for
the Internet.
Translation: No
Net taxes, government should keep its hands off of e-commerce, and
this is not the time to interfere with the biggest cultural movement
since the industrial revolution. | |
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