| Transcript of Statement by Rep. Chris Cox (R-CA). Re: press conference on the introduction of the Internet Non- Discrimination Act. Date: February 3, 2000. Source: Tech Law Journal. Editor's Notes: |
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Good morning, and thank you for joining us. This morning, as you know, in the House of Representatives, Republican and Democratic members are getting ready for our respective conference and caucus retreats, but we wanted to be sure that not only the House, but the Senate, did some important official business this morning. And we are beginning with Senator Ron Wyden, Democrat from Oregon, and Congressman Bob Goodlatte, Republican from Virginia, and myself, Congressman Chris Cox, Republican from California.
We have a very important announcement. Today, we are introducing the Internet Non-Discrimination Act, or INDA. This legislation will make permanent the existing Cox-Wyden ban on multiple, new, and technologically discriminatory taxes that are targeted at the Internet.
Three years ago when Ron Wyden and I introduced the Internet Tax Freedom Act as a permanent ban on new, multiple, and discriminatory taxes on the Internet, our purpose was to nip in the bud the incipient efforts of some thirty thousand tax jurisdictions to lay claim to a piece of the Internet. At the time this was a very real threat. News magazines warned that tax collectors around the country were looking to shake down the Net. Internet access services were a big target for taxes, as more and more Americans were connecting to the Internet. And multiple taxation was a big concern, given that the Internet's very design, its decentralized nature, makes Internet transmissions vulnerable to taxation by many different jurisdictions.
Discriminatory taxation was also a real threat. A number of states were looking to impose tax collection obligations on businesses that received purchase orders over the Internet, but no tax collection obligations if they received those same orders over the telephone, or via the postal service.
The law we passed in 1998, with Bob Goodlatte's leadership and help, stopped all of these special types of taxes. It ensured that the Internet that the Internet won't be caught up in an inconsistent patchwork by the United States thirty thousand taxing jurisdictions.
But what President Clinton actually signed after compromises all around, the Internet Tax Freedom Act, had one shortcoming. It lasts only three years. The temporary nature of the moratorium was something that Ron and Bob and I were willing to accept, out of respect for the concerns of state and local government leaders, who issued dire warnings about the effect that our bill would have on their budget. They warned that a cruel winter would set in unless they were allowed to impose new, multiple or discriminatory taxes on the net. They warned of frozen sales tax revenues, or even falling sales tax revenues. And, they predicted the law would have a chilling effect on the business climate for Main Street brick and mortar businesses.
But now, as we enter into the second year of this moratorium, we are about a year and a half into it, we know that is not what happened at all. The real effects that the moratorium has had are just the opposite. Sales and taxes connected to them are up, way up. The Internet economy is sizzling hot.
While Internet sales are up, brick and mortar sales are up too. Shopping malls, Main Street businesses, and brick and mortar retailers are thriving. The International Council of Shopping Centers reports that 1999 holiday sales at shopping malls were up a whopping 8 percent over 1998. According to Cyber Dialogue, for every dollar consumers spend on e-commerce, they spend even more money, a dollar twenty, making off line purchases.
The Internet has also helped traditional retailers by permitting them to expand beyond Main Street, to sell to a broader market. The Internet is the most effective, cheapest way, for any business, especially small businesses to reach new markets, in the history of mankind. The phenomenal growth of Internet commerce has given retailers an outlet to reinvent themselves, and improve the way they reach their customers.
Taxes collected by state and local governments, most importantly of all, are up, and they are way up. In the most recent month for which statistics are available in my home state of California, sales tax collections are up a whopping 20% over the same period last year. All of this growth in Internet commerce and taxable sales has fattened state budgets which nationwide ended fiscal 1999 with a combined 35 billion dollars in surpluses. The facts are in, and conclusively so. The Internet economy is generating tremendous tax revenue for state and local government. The Internet is opening up new markets. For Main Street businesses, and for job creation, better wages, and a stronger economy. All of these boost tax receipts.
The current hands off tax policy is working, not only for consumers, but also for states, for counties, and for cities.
The power to tax is indeed limited by the Internet Tax Freedom Act. Ron and Bob and I are here today because we want to fulfill the original vision that we had in mind when we began this effort three years ago. So, today we introducing the Internet Non-Discrimination Act, a bill that will make permanent the existing moratorium on new and discriminatory Internet taxes so that we can help sustain the Internet's continued growth.
The virtue of our bill is its simplicity. It doesn't revisit any of the complicated issues that were considered during the original writing of the moratorium. It is a very simple, straightforward, I think, one sentence in the legislation, that says, that the three year expiration date, it goes on indefinitely. Let me also say that our bill is additive to any successful and constructive recommendations that Governor Jim Gilmore and the Advisory Commission on Electronic Commerce will approve in the next several months, such as repealing the three percent federal telecommunications excise. That is something that I personally strongly endorse. Governor Gilmore and the Commission have done excellent work thus far, and as you know, they are expected to report in just two months. It is in fact precisely because that deadline is looming that we recognize that Congress will be asked to settle the questions of what to do now. What happens when this moratorium expires. The Internet Non-Discrimination Act is our answer to that question.
I would next like to introduce my -- I was going to say that we are the dynamic duo, and that is way too lacking in humility, but he is dynamic. He is dynamic. And Ron has more than carried his share of this in the other body, on the Senate side, and in the other party, on the Democratic side. It has been a pleasure to work with Ron throughout these many years that we have been studying the problems and the challenges and the opportunities posed by the Internet economy. I introduce to you now Oregon Senator Ron Wyden.