Cox and Wyden Introduce the Internet Non-Discrimination Act

(February 9, 2001) Rep. Cox and Sen. Wyden introduced companion bills in the House and Senate to extend the current moratorium on multiple and discriminatory taxes on the Internet.

Rep. Chris Cox (R-CA) and Sen. Ron Wyden (D-OR) introduced bills on February 8 titled the Internet Non-Discrimination Act, to permanently ban Internet access taxes and to extend for five years the existing moratorium on multiple and discriminatory taxes on the Internet.

At the end of 1998 the 105th Congress, the Congress passed, and the President signed, legislation containing the Internet Tax Freedom Act (ITFA). This bill created the existing three year moratorium, which is set to expire on October 21, 2001. That bill also created an Advisory Commission on Electronic Commerce to write a report to Congress.

That commission, which also came to be know as the "Gilmore Commission," recommended, among other things, that Congress extend the moratorium of the ITFA for five years. President Bush also endorsed the concept during the 2000 election campaign.

Rep. Cox and Sen. Wyden were joined by Sen. Pat Leahy (D-VT) and Rep. Bob Goodlatte (R-VA) at a press conference in the Capitol building to announce the introduction of the bills.

Sen. Wyden said that "I have not seen a single case anywhere of a community being injured by its inability to impose discriminatory taxes on electronic commerce. As all three of my colleagues have pointed out, all current law requires is technological neutrality; you can do whatever you want with respect to Internet taxes as long as you do unto the offline world what you do to the online world."

Rep. Chris Cox (R-CA)

Rep. Cox explained the bill: "All we're doing here is extending existing law, and that's square one. What is existing law? Existing law says that you can't tax three things -- you can't have a targeted tax on Internet access; you can't have a discriminatory tax that treats the Internet differently than anything else; and you can't have multiple taxes. You can't tax the Internet several times for the same transaction in several states."

Rep. Cox also stated that "perhaps in this legislative process, our bill will be amended so that instead of just a five-year extension it will, in fact, be the permanent ban that we would all like to see."

Rep. Goodlatte stated the "Now we're facing in October of this year an expiration of that moratorium and the potential for more than 7,000 different taxing jurisdictions in the country to attempt to impose new or discriminatory taxes on the Internet. It is a serious threat to all of our collective efforts to make sure that the Internet continues to expand and grow and reaches out to everybody in this country: people in rural areas, people in inner cities."

In addition, Sen. Wyden introduced a bill that would create a set of tax simplification criteria that state and local taxing authorities could use to implement less burdensome tax collection systems for so-called "remote" sales, such as Internet and catalog retail transactions. Once a sufficient number of states have simplified collection, Congress would work on an expedited basis to codify the new system.

"Nobody is saying that states can't collect taxes," said Sen. Leahy. "So we're simply asking states to simplify their sales tax rules, to develop national standards on e-commerce, but we also say that Congress would be able to to consider legislation under fast-track procedures to require sellers to collect sales tax on goods and services sold over the Internet. What we can do with this, we can end up with something that's win-win. We can have a simplification for all Internet providers, can make sure that states and municipalities collect the taxes that they can appropriately, but not do it in such a discriminatory or heavy-handed way that the taxes and the way of collecting them strangle these companies."