STATEMENT OF SEN. PATRICK LEAHY ON INTERNATIONAL INTERNET TAX FREEDOM

September 30, 1999

[Following is the statement of Sen. Patrick Leahy, a co-sponsor of the “International Internet Tax Freedom Resolution,” a concurrent resolution introduced by Senator Wyden and Congressman Cox. The resolution urges the Clinton Administration to seek a global consensus supporting a world-wide moratorium on discriminatory taxes and tariffs on electronic commerce at the November 1999 World Trade Organization ministerial negotiations in Seattle. Senator Leahy was a cosponsor of the Internet Tax Freedom Act of 1998, which outlawed discriminatory state and local taxes to electronic commerce for the next three years. That law also established the Advisory Commission on Electronic Commerce to study and recommend appropriate rules for international, Federal, state and local government taxation of electronic commerce; the Commission’s report is due in April 2000.]

The Internet allows businesses to sell their goods all over the world in the blink of an eye.

The Internet’s unique opportunities also present unique challenges. One of the critical challenges facing the United States and the world is developing tax policies to nurture this exciting new market. That is why I am pleased to cosponsor this resolution to urge the President to seek a global moratorium on discriminatory taxes and tariffs on electronic commerce.

The growth of electronic commerce is everywhere, including my home state of Vermont. Today hundreds of Vermont businesses are doing business on the Internet, ranging from the Vermont Teddy Bear Company to Al’s Snowmobile Parts Warehouse to Ben & Jerry’s Homemade Ice Cream. These Vermont businesses are of all sizes and customer bases, from Main Street merchants to boutique entrepreneurs to a couple of ex-hippies who sell great ice cream. But what Vermont online sellers do have in common is the fact that Internet commerce lets them erase the geographic barriers that historically have limited our access to markets where our products can thrive. Cyberselling is paying off for Vermont and the rest of the United States.

As electronic commerce continues to grow, the United States must take the lead in fostering sound international tax policies. The United States was the incubator of the Internet, and the world closely watches the Internet policies that we debate and propose. Our leadership is critical to the continued growth of commerce on the Internet. Our resolution advances the leadership role of the United States by urging the Administration to secure a global moratorium on discriminatory e-commerce taxes.

With more than 190 nations around the world able to levy discriminatory sales taxes on electronic commerce, we need this resolution to contribute to the stability necessary for electronic commerce to flourish. We are not asking for a tax-free zone on the Internet; if sales taxes and other taxes would apply to traditional sales and services, then those taxes would also apply to Internet sales under our resolution. But our resolution would urge a global ban on any taxes applied only to Internet sales in a discriminatory manner. Let’s not allow the future of electronic commerce -- with its great potential to expand the markets of Main Street businesses -- to be crushed by the weight of multiple international taxation.

Today, there are more than 700,000 businesses selling their sales and services on the World Wide Web around the world. Estimates predict that the number of e-business Web sites will top 1 million by 2003. This explosion in Web growth has led to thousands of new and exciting opportunities for businesses from Main Street to Wall Street. The International Internet Tax Freedom Resolution will help ensure that these businesses and many others will continue to reap the rewards of electronic commerce.