Bills Would Keep Web Tax Moratorium

Friday, February 9th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) â€” The Internet tax moratorium would be extended until 2006 and Internet access taxes banished altogether under bills introduced in the House and Senate on Thursday.

Sen. Ron Wyden, D-Ore., who introduced the Senate version, said the extension is necessary to prevent a ``crazy quilt'' of tax structures in each state and locality. The current tax ban will expire Oct. 21.

``If that happens,'' Wyden said, ``the World Wide Web is going to look like Dodge City before the marshals showed up.''

Supported by Internet caucus co-chairmen Sen. Patrick Leahy, D-Vt., and Rep. Bob Goodlatte, R-Va., the bills target so-called ``discriminatory'' taxes, levies on Internet transactions that have no comparable version in the off-line world. Reps. Christopher Cox, R-Calif., and Goodlatte introduced the House bill.

President Bush endorsed this plan during his campaign, the congressmen noted, and several high-tech industry groups also issued statements supporting the measure.

Wyden said under the proposed law, Congress would conduct an ``up or down vote'' on whether to let states collect taxes on goods delivered from out-of-state companies. But he, Cox and Leahy said they didn't think the states should do so.

``Nobody is saying that states can't collect taxes,'' Leahy said, adding that states still benefit from Internet companies in their jurisdictions. ``What we are saying, however, is don't drown the baby in the bathtub.''

Neal Osten of the National Conference of State Legislatures said the states would be ``very much opposed'' to a permanent ban on Internet access charges, due to the rise in telecommunications companies ``bundling'' Internet access, telephone service and other utilities.

``It's a farce, it's a joke,'' Osten said. ``It's just trying to cover for really screwing the states out of future revenues from telecommunications taxes.''

The Senate bill does allow taxation on long-distance calls made through a computer â€” a practice becoming more and more popular â€” but Osten was skeptical on how states could recoup that money, since the calls are often free.

``If there are no charges to the consumer,'' Osten said, ``how do you tax that?''

A congressional study in July found states and localities would lose $300 million to $3.8 billion in tax revenue in 2000 because of purchases made over the Internet.

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On the Net: Sen. Ron Wyden: http://wyden.senate.gov

Rep. Christopher Cox: http://www.house.gov/cox

National Conference of State Legislatures: http://www.ncsl.org

Find the bills at: http://thomas.loc.gov