University student Sara Dahl started buying books online two years ago. “It was a lot easier to buy a book from Amazon.com or Barnesandnoble.com than trying to find it at a random book store,” she said.
The substantial growth of electronic commerce has caused Sen. Ron Wyden, D-Ore., and Rep. Christopher Cox, R-Calif., to introduce the Internet Tax Non-Discrimination Act. The act would extend the current Internet Tax Freedom Act, which bans all U.S. taxing jurisdictions from creating taxes unique to the Internet.
ITNDA, which was introduced in early January, would ban multiple Internet taxes, including a tax on Internet access and “bit tax” which would tax Internet information as it moves across servers through different taxing jurisdictions. The act is pushing for a five-year moratorium against levying taxes on the Internet that aren’t levied elsewhere.
Wyden said in a press conference that not a single state in the country could prove it had been hurt by the inability to discriminate against e-commerce.
“Under the Cox-Wyden bill, you simply must treat merchants online like you treat those offline,” he said at the press conference. “It is simply about … technology neutrality.”
Also backing ITNDA are corporations such as eBay Inc., the Direct Marketing Association, the Software and Information Industry Association and others.
In a letter of support, eBay’s Tod H. Cohen wrote that “imposing discriminatory taxes on Internet access and e-commerce is anathema to two fundamental national goals: Promoting the growth and development of a 21st century economy and allowing every American, especially those with lower incomes, to participate fully in the Internet-based economy.”
Dahl agreed with Cohen, saying it would be a lot harder for her to shop online if there were added taxes to her purchase.
“I wouldn’t bother with (shopping online),” she said.
The Internet Tax Freedom Act was also co-authored by Wyden and Cox, and passed into law in 1998. ITFA prohibits three types of taxes, which, according to Wyden, single out the Internet. The Act prohibits taxes on Internet access, double taxation of a product or service bought over the Internet by two or more states and taxes that treat Internet purchases differently than other types of sales.
ITFA was renewed for two years in November 2001, and will expire in November. Wyden said in a press release that the nearing expiration of ITFA was the reason for the introduction of Internet Tax Non-Discrimination Act.
“This (act) makes sure e-tailers have an equal shot at success in today’s economy, and I believe they should be protected once and for all from unfair taxes that threaten their survival,” he said. “It’s time to make this ban permanent.”