- The Washington Times - Wednesday, November 12, 2003

Senate leaders are trying to find a way to extend a ban on Internet taxation that expired Nov. 1. On Friday, a vote on the moratorium was canceled in response to a filibuster threat led by freshman Republican Sens. Lamar Alexander of Tennessee and George Voinovich of Ohio. Over the past few days, various compromises were floated to no avail. If a deal can be reached, the ban would continue to prohibit multistate taxes on Internet sales, higher taxes for Internet sales than traditional retail sales, new taxes on Internet services and taxes on Internet access. Since 1998, this tax ban allowed the vitality of the Internet to flourish. Failing to extend this freedom threatens to ruin a good thing.

There is no doubt that the legislation is being held up by a small minority of legislators against the will of the vast majority. In the House, a Sept. 17 vote to ban Internet taxation passed unanimously, and that was not merely a temporary extension but a permanent prohibition. Many lawmakers supported the bill because they fear new taxes could endanger the nation’s current economic recovery. As Sen. Ron Wyden, Oregon Democrat, one of the bill’s sponsors, said last week, “If the more than 7,000 taxing jurisdictions in this country are allowed to take a bite out of the Internet … I think that could derail the very impressive progress that we have seen in the technology sector in the last two months.”

Internet taxation is not a traditional debate pitting Democrats against Republicans. As one Senate staff member explained to us, “The fear of a future tax on every single e-mail message someone sends is not a partisan issue.” In short, one point of a total ban on Internet taxation is to prevent the camel’s nose from getting under this techno tent.

The demand for unobstructed Internet access transcends demographic barriers. Although routinely depicted as a technology dominated by youngsters, there are millions of retirees surfing the Net, especially to take advantage of easy online shopping with delivery service. The wide appeal to maintain a tax-free Internet could lead to a bipartisan solution. Senate staffers now are trying to work a moratorium into the omnibus appropriations bill that leaders hope to get passed by Thanksgiving.

It is no surprise that bureaucrats want to get their cut out of the huge Internet market. State and local governments already take in more than $20 billion in telecommunications taxes annually. New Internet taxes would increase government revenue by the billions. As the Beatles sang of taxation mania in their 1966 hit “Taxman”: “If you take a walk, I’ll tax your feet … If you drive a car, I’ll tax the street.” It is important that this principle not be allowed to impede traffic on the information highway.

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