No Taxes On Internet Sales Says U.S. House

Death and taxes are inevitable goes the old saw, but taxes may not be inevitable on the Internet. Last week the U.S. House of Representatives voted 423 to 1, passing a bill to prevent sales taxes from being imposed on global Internet sales. The bill, introduced by Rep. Christopher Cox (R-California), heads to the Senate next, where Sen. Ron Wyden (D-Oregon) is pushing for its passage.

E-Commerce Times reports that passage is likely, especially after President Clinton has given his support. With its passage, it's possible that other nations could follow suit.

Wired.com reported that even though the U.S. lobbied the World Trade Organization to halt their taxation efforts last December, many governments aren't quite persuaded. According to the article, "Pascal Lamy, the EU's top official for trade policy, said Europeans have 'no problem' with extending the current moratorium. But they want further clarification on how a permanent ban would function." EU member governments have a system of value-added taxes, which are collected to fund the EU's activities.

Transatlantic Business Dialogue (TABD) met recently in Berlin to discuss the possibility that European nations would follow suit. The organization is comprised of US and European execs who lobby government on trade issues, like the Internet tax prohibition. Wired said that a confidential briefing paper of TABD members want a permanent ban on Internet taxation. But EU members stand to lose large amounts of income without the taxes, unless businesses were willing to pay higher income taxes.

With passage of the U.S. bill, there are three points the WTO will need to consider. First, the U.S. bill calls for an international ban on e-commerce taxes.

Second, it carries an U.S. declaration opposing "multiple, discriminatory or special taxes" which some countries are using to provide native businesses advantages in e-commerce.

Finally, the bill rejects a United Nations' proposed "bit tax" that would tax e-mail deliveries. Taxation would be based upon the amount of information that is being transferred.

The next round will be in Seattle where the WTO is scheduled to meet again November 30.