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Press Release
COMMONWEALTH FOUNDATION & e-FREEDOM COALITION ROLL OUT PLAN TO FIGHT TAXES ONLINE, EXPAND INTERNET ACCESS
Released by Sean Duffy on 11/10/99
of Commonwealth Foundation

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FOR IMMEDIATE RELEASE (10/10/99)
CONTACT: Sean Duffy – 717-671-1901
www.commonwealthfoundation.org
Poll Shows Pennsylvanians Oppose New Internet Taxes

(HARRISBURG) -- Warning of the dangers of imposing taxes on the Internet, The Commonwealth Foundation today joined with more than 20 consumer, taxpayer, and public policy organizations in presenting a plan to keep new tax collection schemes off the Internet, and tear down barriers to online access, and protect consumer privacy.

The "e-Freedom Coalition," which includes The Commonwealth Foundation, unveiled its plan at a Washington news conference with House Budget Committee Chairman John Kasich, who pledged to introduce legislation to make some of the Coalition's recommendations law.

"Too many in government see the explosive growth of the Internet and electronic commerce as a new opportunity for tax collectors instead of an exciting new opportunity for consumers and taxpayers," said Commonwealth Foundation President Sean Duffy. "It's up to citizens to demand that the Internet and our high tech economy be encouraged to expand without the stifling effect of new taxes and new controls."

Duffy pointed to the results of the Foundation's recent Decision Pennsylvania poll that nearly half of those polled -- 47 percent -- oppose new Internet taxes.

"Clearly Pennsylvania voters understand that slapping e-commerce with new taxes hurts consumers, hurts business and hurts our economy," he said.

Internet commerce is a growing part of Pennsylvania's economy. The state Department of Revenue estimates that Internet sales to Pennsylvania consumers totaled more than $600 million in 1998, with Internet sales to businesses in the state reaching $3.3 billion that same year. The Department estimates that those figures will grow substantially in coming years. Nationally, experts estimate Internet trade reaching $1.3 trillion by 2002. The International Data Corp. recently estimated that electronic commerce sites on the Internet will more than double to 1.2 million by 2003.

Specifically, the e-freedom coalition proposes:
  • a permanent ban on sales and use taxes that specifically apply to online commerce;
  • setting clear rules to ensure that only those companies with a physical presence in a state can be compelled to collect sales taxes;
  • tearing down government-imposed taxes and rules that drive up the cost of Internet access. The federal 3 percent excise tax on telephone service – originally levied to help finance the Spanish-American War -- would be immediately relegated to the ash heap if Congress decides to accept the group's proposal;
  • terminating state and local practices of taxing telecommunications properties at higher rates than other commercial properties would also be terminated, along with any attempt to specifically tax Internet access (e.g., the $19.95 per month consumers pay their Internet Service Provider for dial-up and other access).

"In short, our proposal hinges on many of the principles that have prevailed in fostering the Internet's own phenomenal growth: openness, fairness, accessibility, freedom and the minimal involvement of political institutions," the proposal states. "We now propose taking the Internet into the next century by increasing its accessibility, encouraging the growth of e-commerce, and enabling tax collection within proper constitutional guidelines."

The plan, available online at www.e-freedom.org, takes the form of a proposal to the federal Advisory Commission on Electronic Commerce. Congress created the temporary panel to study tax issues presented by the growth of the Internet and online commerce, and report its findings back to Congress next year. The Commission will hold its second to last meeting in San Francisco next month. More information on the Commission is available online at www.ecommercecommission.org.

Duffy said Pennsylvanians have the opportunity to make their views known on new Internet tax collection schemes by sending a comment to the Commission at comments@ecommercecommission.org.

Founded in 1988, The Commonwealth Foundation is a statewide, non-partisan, public-policy research organization based in Harrisburg, Pa.
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