House Judiciary Committee Approves Two-Year Extension of Internet Tax Moratorium

On October 10, the House Judiciary Committee voted 19-15 to extend the Internet tax moratorium until November 1, 2003, significantly scaling back the version of H.R. 1552 passed by the Commercial and Administrative Law Subcommittee in August.

The original language of H.R. 1552, sponsored by Representative Christopher Cox (R-California) would have extended through 2006 the ban on new and discriminatory taxes and made permanent the ban on Internet access taxes. But an amendment offered by Representative Spencer Baucus (R-Alabama) to scale back the extension surprisingly passed, as five Republicans joined most of the panel’s Democrats to approve the amendment.

Baucus also introduced two other amendments. The first would have tied the controversial sales tax "simplification" issue to H.R. 1552, which was ruled non-germane by Committee Chairman James Sensenbrenner (R-Wisconsin). The second amendment, which would have extended the moratorium until June 30, 2002, failed by a 19-12 vote.

The Center for Individual Freedom is adamantly opposed to this short-term extension, as it hampers the prospects for long-term growth in the new economy by implanting further uncertainty in an already crippled technology market. We feel that five years is the minimum amount of time necessary to provide much-needed stability to the Internet and e-commerce.

The sales tax issue can be dealt with separately, once there is conclusive evidence that state governments are losing substantial revenue due to Internet sales, and the numerous benefits that result from e-commerce do not outweigh such losses. That cannot be established in two years or less, particularly in this troubled economy.

Return to Internet Taxation Index