House votes to extend Internet tax moratorium

After nearly a full day of debate, the House of Representatives yesterday overwhelmingly passed a bill to extend the moratorium on Internet access taxes and new taxes on Internet sales until October 2006. The measure now goes before the Senate, where its fate is uncertain.

During the day, efforts to limit the extension to just two years, to extend it 99 years and to keep it forever all failed. A separate resolution proposing that states and municipalities work to simplify sales and use tax systems passed. The final vote on the bill, titled the Internet Nondiscrimination Act, was 352-75 with a majority of both party’s representatives voting for the bill.

Some Senate Republicans, however, said late yesterday that they think the five-year extension is too long and that the bill does not address some pressing issues, including how states can compel Internet sellers to collect existing state and local sales taxes. The bill also does not address the issue of a level playing field between brick-and-mortar stores and Internet sellers. President Clinton agreed with the senators' concerns and said he’d veto the bill in its current form.

ICSC lobbied strongly against the bill and opposes its final form. "While ICSC does not oppose the actual substance of the moratorium (its ban on access or discriminatory taxes), we believe that the longer the moratorium is extended, the more difficult it will be to address the remote sales tax collections issues," said Becky Sullivan, ICSC staff vice president for government relations.