Bush Favors Extending Ban on New Internet Taxes

Reuters

May 8, 2001

WASHINGTON (Reuters) - President Bush (news - web sites) will call for extending the moratorium on special Internet-only taxes and for permanently banning Internet access taxes in a speech on Tuesday echoing his campaign positions, aides said.

A White House official said the Republican president would address both subjects in a speech to the Electronic Industries Alliance, a trade group representing a range of high technology companies, many of which enthusiastically back both policies.

In 1998, Congress enacted three-year bans, set to expire on Oct. 21, on taxing the fees people pay for Internet service and on imposing discriminatory taxes that treat Internet sales differently from other forms of remote commerce like catalog sales.

The issue pits the high technology industry against states and local authorities who fear the loss of sales tax revenues that they use to pay for everything from schools to ambulances.

Currently, Internet retailers are generally treated like catalog retailers, collecting sales tax only if they have a physical presence, like a store or a warehouse, in the purchaser's jurisdiction.

During the 2000 presidential campaign Bush said he favored making the ban on Internet access taxes permanent and extending the ban on discriminatory Internet taxes by up to five years.

``The president favors extension of the moratorium on Internet taxation and he favors a permanent ban on all Internet access taxes,'' White House spokesman Ari Fleischer (news - web sites) told reporters on Tuesday.

Fleischer said Bush would work with Congress on deciding how long to extend the moratorium, saying officials needed to study how the Internet would affect government revenues.