Leahy Reaction To E-Commerce Commission's Recommendations For Internet Taxation

Leahy Reaction To E-Commerce Commission's Recommendations For Internet Taxation

April 12, 2000

Also Today, Owner Of Vermont's Morse Farm Sugar Works Testifies Wednesday Before Senate Panel On Leahy-Backed Internet Tax Moratorium Bill

(April 12) -- Sen. Patrick Leahy today hailed Burr Morse, President of Vermont's Morse Farm Sugar Works, for his testimony before a U.S. Senate hearing on Internet taxation legislation. That bill, sponsored by Sen. John McCain and cosponsored by Leahy, would extend the present moratorium on any new, discriminatory taxes on electronic commerce for an additional five years, through 2006. Burr Morse, grandson of former Vermont Senator George Aiken, testified in support of the legislation. Mr. Morse is a maple sugar farmer -- with a successful website www.morsefarm.com -- from Montpelier, Vermont. His testimony before the U.S. Senate Commerce Committee is available upon request.

The Advisory Commission of Electronic Commerce also today released its recommendations on taxation of electronic commerce. The Commission was created by the 1998 "Internet Tax Freedom Act," a law also cosponsored by Leahy which established the present three-year moratorium on discriminatory Internet taxes.

Specifically, the Commission recommended:

Extend the current Internet tax moratorium legislated by the Congress on multiple and discriminatory taxation through 2006;
endorsed simplification of states' sales and use tax systems, but failed to reach consensus on how states may collect sales taxes on out-of-state sales of e-commerce;
repeal of the federal three-percent excise tax on communications services established in the 1890s, and;
permanently prohibit states or localities from taxing Internet access subscription charges.

Leahy Reaction: "I agree with the Commission that Congress should extend the present moratorium on discriminatory taxes on the Internet. If not, there are 30,000 different jurisdictions that could levy Internet taxes once the moratorium expires. Electronic commerce is still in its infancy, and we shouldn't risk its growth and maturity by imposing a maze of new taxes on e-commerce and e-customers. I am disappointed that the Commission failed to reach an agreement on how states can collect sales taxes due on out-of-states sales on the Internet. Resolving this sales tax issue is a key to the future development of e-commerce. I hope that the governors and state legislatures can move forward with simplifying each state's sales tax rules into some national standards to develop a level playing field for all. I also agree with the Commission that Congress and the private sector should protect the privacy of online buyers and sellers. E-commerce will only continue to flourish if online users feel they have control over the use of their personal information."

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