U.S. Treasury Supports Internet Tax Ban

In a speech given to the Computer and Communications Industry Association on Monday, U.S. Treasury Deputy Secretary Stuart Eizenstat declared the agency’s support of a permanent Internet sales tax ban, despite the contribution such taxes would make to U.S. coffers.

“We need to be sure that we do not discriminate against sales on the Internet and thereby impede the growth of e-commerce. We need to ensure that governments finance themselves in a way that does not impede the growth of the Internet,” Eizenstat said.

However, Eizenstat also emphasized that the Internet must not become a tax haven that deprives governments of the revenues necessary to fund such essential civic services as education and police and fire protection.

Party Line

According to Eizenstat, information technology industries and firms account for less than 10 percent of the U.S. work force, but have contributed almost a third of the U.S. economic growth over the past few years.

“Information technology has been the largest single factor in the remarkable increase in productivity, which has given us a high rate of GDP growth with very low unemployment and low inflation,” he said. “It has helped make the United States a high performance economy, powered by technology, driven by ideas, rewarding the value of innovation, flexibility and enterprise, and attaining ever better living standards for its people.”

The deputy secretary outlined the same technology platform that the Clinton administration has been presenting for more than a year. Eizenstat’s speech was essentially a vehicle for the administration to drum up support for the Internet tax ban and other Internet initiatives being debated in Congress this year.

“This Administration has stressed the need for the private sector to lead on Internet policy, avoided unnecessary regulation, and drafted policies that recognize that the Internet has no borders. Nevertheless, government also needs to help instill confidence in the Internet by ensuring that appropriate measures are taken to protect consumers, infrastructure, and our security interests,” he said.

Treasury Advances

Eizenstat also commented that the Treasury Department tries to lead by example when it comes to integrating new technology into age-old systems. The Treasury, according to Eizenstat, has had “significant success” using these new technologies. “In some areas, we are ahead of the private sector,” Eizenstat said.

For example, the Treasury Department runs one of the largest electronic payment collection systems in the world, taking in more than $1.3 trillion (US$) per year. Two out of every three dollars of U.S. government revenue are collected electronically. In addition, citizens can pay taxes online, and more than three-quarters of all government benefit payments are made electronically, according to the deputy secretary.

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