- The Washington Times - Saturday, May 19, 2001

I agree with your assessment that Sen. George Allen will have to “buck the tide” to get his bill that permanently bans Internet taxation passed (“No new Internet taxes,” Editorials, May 17). As you may know, a measure to extend the moratorium sailed through the House earlier this week. Meanwhile, the Senate continues to negotiate the moratorium, with 7,500 hungry tax entities awaiting their decision in the wings.

Should we lift the moratorium, extend it or make it permanent? Lifting the moratorium would create a tax collection under our structure nothing short of a nightmare. If pro-tax lobbies are successful, electronic commerce entrepreneurs would be forced to interpret and attempt to manage a myriad of tax rules, regulations and rate structures across America.

To solve this, a number of proposals have been floated, calling for the creation of a “tax cartel,” among other schemes. But to “level the playing field” as pro-tax advocates such as Sen. Byron L. Dorgan would like, states would have to streamline their tax structures, thus reducing tax rate competition between local authorities, ultimately resulting in a de facto national sales tax on interstate commerce that limits the control tax authorities have over establishing and defining their own tax rates.

The states may cry to Congress that they are losing their tax revenue base to electronic commerce, but the numbers don´t lie. Most states have consistently run a surplus, and the Cato Institute reports that last year, revenues from existing sales taxes rose 7.3 percent.

If the states are so in need of this “lost revenue,” which by best estimates represents less than 1 percent of their total revenues, why then have 21 states chosen to cut taxes and lower their existing sales tax collections by a total of $1.6 billion?

Extending the moratorium would allow for significant debate to continue on the issue, but it is nothing short of a stalling measure, leaving the inevitable question yet to be addressed. The truth is that minor changes in Internet taxation and regulation have far-reaching effects we cannot accurately predict.

The Internet is worthy of defense for the revolutionary impact it has had on all of our lives. It has created jobs, economic growth, prosperity and opportunities for all Americans.

As Mr. Allen and Sens. Conrad Burns, Judd Gregg and John W. Warner have advocated with S. 777, we must make permanent the moratorium on the Internet. President Bush is on board. All that´s left to make the moratorium permanent is a nod from Capitol Hill.


Executive vice president


Bellevue, Wash.

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