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Center Supports Permanent Internet Tax Moratorium

Warns Against Efforts to Establish Interstate Tax 'Cartel'



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Contact: Jeffrey Mazzella

July 16, 2003

Alexandria, Va. — With the Internet Tax Moratorium set to expire on November 1, the Center for Individual Freedom today applauded the Senate Commerce Committee for holding a hearing on two pieces of legislation — S. 52, sponsored by Senator Ron Wyden (D-OR), and S. 150, sponsored by Senator George Allen (R-VA) — that would make permanent the ban on multiple and discriminatory e-commerce taxes and Internet access taxes.

"Despite recent setbacks in the technology industry, the Internet remains a remarkable resource for information and expanded commerce essential to individual freedom and a vibrant economy," said Jeffrey Mazzella, the Center's Sr. Vice President of Legislative Affairs. "Making the moratorium permanent will ensure the Internet and e-commerce continue to thrive, while ending once and for all the deleterious public policy temptations of state tax officials and money-hungry governors who see the Internet as nothing more than an opportunity to pick the pockets of consumers."

While the Center expressed its ardent support for both the Wyden and Allen bills, which are nearly identical, it cautioned all Senators against a growing effort by the states and some in Congress, led by "Internet Tax Man" Byron Dorgan (D-ND), to tie the moratorium to the separate and more controversial issue of sales and use tax "simplification." By agreeing to "simplify" their sales and use tax rates, states are hoping to receive Congress' approval to expand their taxing jurisdictions and force out-of-state merchants to collect and remit sales and use taxes for them — something currently prohibited without Congressional approval by the U.S. Supreme Court's 1992 Quill decision.

"Any effort to create such an interstate tax cartel works contrary to the founding principle of tax competition between the states," said Mazzella. "This would be the first step toward the creation of a de facto national sales tax, with states colluding to stick it to consumers and leaving small businesses with no place to turn."

In 2001, the Center ran ads branding Senator Dorgan the "Internet Tax Man," as his efforts to tie the "simplification" issue to the popular moratorium led to its temporary expiration. He has indicated that he will attempt to tie the two issues together again this year.

"The two issues are separate, and should stay that way. If the Internet Tax Man believes otherwise, we stand ready to defeat him once again," Mazzella concluded.

The Center for Individual Freedom is a nonpartisan, constitutional advocacy group that fights to protect individual freedoms and rights in the legal, legislative and educational arenas.


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