- The Washington Times - Thursday, May 11, 2000

A bill extending the Internet-tax moratorium by another five years passed easily in the House yesterday, even though the current ban on taxes doesn't expire until 2001.

House Republicans supported the bill to prohibit new Internet taxes through October 2006.

Supporters of the bill said the measure, which passed 352-75, is intended to encourage electronic commerce and the growth of the Internet.

"The Internet must remain unfettered by burdensome taxes and regulation to ensure continued growth and innovation in the 21st century," said Rep. Robert W. Goodlatte, Virginia Republican.

Opponents of the tax ban said the moratorium is unfair to bricks-and-mortar retailers, but added they aren't giving up their fight for equal treatment for traditional businesses.

"If a five-year moratorium were signed into law, it would do damage [to the equity group's agenda], but we're a long way from that," said Lisa Cowell, executive director of the E-Fairness Coalition, a national group representing 1.5 million retail stores.

An effort to amend the bill by congressmen who felt a five-year moratorium was too long went down to defeat. Rep. Bill Delahunt, Massachusetts Democrat, introduced an amendment to extend the moratorium by two years. That measure was narrowly defeated, 219-208.

Extending the moratorium was one proposal supported in a report by a majority of the congressionally appointed Advisory Commission on Electronic Commerce, the 19-member group chaired by Virginia Gov. James S. Gilmore III.

"Congressional leaders are to be commended for protecting American consumers in this dynamic new Internet economy. The Internet continues to create unprecedented numbers of new jobs and new prosperity for working men and women and their families. Government must not burden American taxpayers with" electronic taxes, Mr. Gilmore said.

A group of 34 governors opposed the report that Mr. Gilmore delivered to Congress and some sent a letter to both Republican and Democrat leaders of the House and Senate on April 12 urging them to reject the report.

Utah Gov. Michael O. Leavitt, a Republican, said during the advisory commission's March meetings in Dallas that states could lose a combined $25 billion a year if they were prohibited from collecting a tax on Internet sales.

Forrester Research, a Cambridge, Mass., Internet researcher, estimates annual Internet sales will reach $52 billion by 2001. That money is the crux of the debate.

Last Thursday, the House Judiciary Committee approved the five-year moratorium, introduced in February by Rep. Christopher Cox, California Republican, by a 29-8 margin.

An amendment attached to the bill encouraging, but not requiring, states to simplify their tax laws did earn approval.

But the bill approved yesterday doesn't address the more contentious element in the Internet-tax debate how to collect sales taxes once the moratorium expires.

In addition to pushing through the Internet-tax moratorium, House Republicans yesterday introduced their high-tech agenda, a plan that includes an increase in visas for highly skilled foreign workers and elimination of a 3 percent telecommunications tax, a 102-year-old levy enacted to fund the Spanish-American War.

"Phone taxes make access to the Internet more expensive. It's time to declare an end to the Spanish-American War and eliminate the telephone excise tax. We'll do that later this month," said House Majority Leader Rep. Dick Armey, Texas Republican.

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