By Rachel Chalmers
The Advisory Commission on Electronic Commerce is about to hold its first public meeting in Williamsburg, Virginia to decide whether internet transactions should be taxed. The Commission was established after the passage of the Internet Tax Freedom Act in October 1998. That Act imposed a three-year moratorium on internet taxation in the United States, and called for the Advisory Commission to review the issue before the moratorium expires. The 21 appointees to the Commission are supposed to comprise a balance of public and private-sector interests. They are charged with reporting their findings to Congress in April 2000. Another meeting is scheduled for New York in September, a third for California in December and a fourth for Austin, Texas in April of 2000. Deliverables from each meeting are not specifically identified, but the Commission hopes to produce interim reports ahead of its final report in April 2000.
This first meeting is expected to explore the implications of electronic commerce for the domestic economy and US international competitiveness, as well as for international tax and tariff issues. The euphoniously named Orson Swindle, a commissioner with the Federal Trade Commission, will provide policy perspectives on taxation in a cyber economy. Few surprises are expected, however. Virginia governor Jim Gilmore, who is expected to chair the Commission, has made no secret of his aggressively anti-tax position. He is not alone in his views. Neither Grover Norquist, president of Americans for Tax Reform, nor MCI WorldCom’s John Sidgmore, nor Gateway CEO Ted Waitt, seem likely to favor an invasive tax regime.
That means supporters of alternative points of view may look elsewhere for a forum. Business Week reports that the National Governors Association, the US Conference of Mayors and other state and local government groups are planning to do an end run around the Commission. They want to come up with their own uniform sales-tax proposal. At stake, after all, are billions of dollars’ worth of new levies, both on e-commerce and mail-order sales. US city and state governments can ill afford to forego that revenue without a fight. The dissenters hope to draft model legislation by September that would simplify sales taxes and ease the burden of auditing and filing. Each state would set its own sales-tax rate, but that rate would be the same whether goods were purchased from a main street store or a web site. What the free-trade mavens on the Commission will make of that proposal remains to be seen.
