Another E-Commerce Commission Proposal Approved in Congress
- Commission's Report Sailing Through Congress -

Arlington, VA - May 17, 2000 - In separate Committees today, Congress continued to act on the Advisory Commission on Electronic Commerce's Report. The House Ways & Means Committee passed HR 3916, repealing the three percent Federal telephone tax. HR 3916 is expected to go to the House floor for a vote next week.

The Report, sent to Congress by the Advisory Commission on Electronic Commerce, called on Congress to abolish the tax completely in order to relieve tax burdens on Internet connections, reduce the cost of Internet access, and help bridge the digital divide. The Federal three percent tax appears on each consumer's monthly telephone bill, and applies to all local and long-distance telephone service, including the use of phone lines to access the Internet. The tax was first levied in 1898 as a luxury tax on the few Americans who owned telephones in order to fund the Spanish American War.

"With the approval of this bill, the Committee has just voted to save the taxpayers of America $5 billion each year," said Commission Chairman, Virginia Governor Jim Gilmore, III. "This sort of tax relief is a giant step toward cutting taxes for American consumers and bridging the gap in the digital divide." Gilmore also noted, "Cutting the telephone tax is the third major idea from the Commission to gain traction in Congress. The Commissioners can take pride their work is delivering tax cuts for the American people."

In other Congressional action today, the House Judiciary Committee heard testimony from former Advisory Commission members Paul Harris (Delegate, Commonwealth of Virginia), Ron Kirk (Mayor, Dallas, Texas), Grover Norquist (President, Americans for Tax Reform), and Stan Sokul (Consultant, Davidson & Co.) in a hearing on HR 4267. Co-sponsored by Representatives Henry Hyde (R-IL), John Conyers (D-MI), George Gekas (R-PA), and Jerrold Nadler (D-NY), the bi-partisan bill is known as the Internet Tax Reform and Reduction Act of 2000. The bill amends the 1998 Internet Tax Freedom Act to impose a permanent moratorium on state and local taxes on Internet access; to extend for five years the duration of the moratorium applicable to multiple and discriminatory taxes on electronic commerce; to impose a five-year moratorium on taxes on sales of digitized goods and products; to encourage states to adopt a Uniform Sales and Use Tax. HR 4267 also would define clear jurisdictional nexus rules for sales taxes on remote sales. Each of these ideas was contained in the Commission's Report.

The Commission was created 20 months ago by the Internet Tax Freedom Act. The Commission delivered its Report to Congress on April 12. It includes formal Recommendations that were endorsed by two-thirds or more of the 19 senior industry, government, and public policy executives who served on the Commission. The Report also includes Majority Policy Proposals that were agreed to by more than a majority of the Commissioners. Just last week, the House of Representatives voted 352 to 75 to pass HR3709, supporting the Commission's Report by extending the moratorium for five years prohibiting multiple or discriminatory taxes on electronic commerce, and eliminating taxes on Internet access fees.

About the Advisory Commission on Electronic Commerce

Appointed by Congress in October 1998 as part of the Internet Tax Freedom Act, the 19-member Commission has been tasked with studying the impact of federal, state, local, and international taxation and tariffs on transactions using the Internet and Internet Access. The Commission's recommendations were provided to Congress on April 12, 2000, ahead of the deadline of April 21, 2000.