E-Commerce Tax On Agenda, As Commission Begins Work

They’ve just begun their work in Williamsburg, Virginia this week — and surely the 19-member Advisory Commission on Electronic Commerce is aware of the stakes as they set to lay out a legislative proposal on Internet taxation.

The commission has already been lobbied hard — by opponents of Internet commerce taxation who say that it would stymie growth and cause a bureaucratic jungle of red tape — and proponents who say that merchants, whether they be in cyberspace or Gramercy Place, should all be taxed equitably.

The commission’s own chairman recognizes the contentious nature of the work at hand. The commission will report its findings to Congress by April, 2000. The moratorium on special taxation on the Internet expires in October, 2001.

“I would not overestimate the conflict,” Virginia Governor Jim Gilmore told reporters Monday. “It may not be resolvable. My goal is to run the commission in a way that allows all ideas to be aired out and give a fair hearing. We will not cook up a policy and try to ram it down somebody’s throat.”

Politics and Taxes

Gilmore got a taste of the political skullduggery the issue of Internet taxation has raised when Mississippi Senator Trent Lott replaced former Netscape head Jim Barksdale on the commission with a local public official, which, according to the Associated Press, tipped the commission’s balance towards government.

The commission is made up of industry leaders like Robert Pittman, president of America Online, Michael Armstrong, AT&T CEO and Richard Parsons, Time Warner CEO. It also consists of elected officials like Gilmore, Utah Governor Michael Leavitt and Washington Governor Gary Locke and representatives of lobbying groups like the National Conference of Commissioners, Americans for Tax Reform.

Few issues raise the ire and the political will of Americans like taxes. A group called the Internet Tax Fairness Coalition has rallied around the issue and sent out a press release Monday calling for the commission “to recommend a fair, nondiscriminatory taxation.”

The group consists of representatives of industry trade groups, Microsoft, Cisco Systems, Citibank and America Online, which apparently doesn’t feel there’s a conflict in representing the commission and being a member of the coalition.

Tax Will Hamper Growth, Group Says

The group claims that a tax on e-commerce would hamper growth of an industry which one recent study said was rising at the rate of 300 percent and could top $200 billion (US$) annually – or more, depending on who is conducting the study.

The coalition also says that the Internet is a medium without borders and no system could fairly levy a tax that wouldn’t be discriminatory, confusing and inconsistent. The commission, it said, should heed the words of President Clinton, who said that the Internet potential would be better realized without government intervention.

The commission adjourns late Tuesday. The proceedings can be followed live at www.ecommercecommission.org, a representative of the coalition told the E-Commerce Times. The next meetings will take place in Silicon Valley, California, Austin, Texas and New York City.