Internet tax via a stacked deck I n late June 1999, a 19-member commission created by the U.S. Congress first met in Williamsburg, VA to consider recommending new laws regarding taxes on electronic commerce. Like a salivating Pavlov dog, politicians view the tremendous growth in online sales as a mechanism for funding all types of projects. To be fair, politicians are also worried about sales moving online with the result that current revenues from conventional sales will be adversely effected and erode their tax base.
A few years ago a U.S. Federal moratorium on new taxes on electronic commerce was put into effect as a mechanism to postpone compliance with various disparate state laws as well as the effect of collecting and dispersing sales tax from adversely affecting the growth of electronic commerce. The effect of this tax moratorium was probably beyond the wildest expectation of most politicians, with Internet sales expected to top $200 billion during 2000. A little simple arithmetic tells us that at a six per cent tax rate states will forgo $12 billion in sales tax. Clearly this is not pocket change.
Because the Federal moratorium on new taxes on electronic commerce expires on 21 October 2001 the newly formed commission's recommendations will have a considerable effect upon congressional legislation. However, can we expect the commission to make a fair and unbiased recommendation? If we look at the composition of the commission and the manner by which it was adjusted the answer is NO. Let me explain.
Commission members fall into two major groups-government officials and executives from telecommunications and Internet industry companies. Although the initial groups were evenly subdivided, prior to the first meeting organization's representing mayors and counties filed a lawsuit to block the commission from meeting. Only when the U.S. Senate replaced former Netscape Communications Corporation CEO James Barksdale with a local government representative was the lawsuit withdrawn, enabling the commission to meet. This action also tipped the membership in the commission's groups towards government. With politicians controlling the commission what are the chances of electronic commerce remaining immune to new taxes? To answer this question I ask you to remember a scene in the movie Tucker when Mr Tucker met a politician on the steps of the Capitol. Referring to the manner by which the politician was standing, Mr Tucker probably had a classic statement when he said, 'This is probably unique -a politician with his hands in his own pockets!' Taking a clue from the movie Tucker I hope politicians will keep their hands off electronic commerce. Forcing tens of thousands of small businesses to keep extensive state and local tax information and disburse funds to 50 state agencies is a sure method to kill startups as well as many well-established small organizations that have a presence on the Web. Thus, I hope some common sense prevails before the stacked commission issues its report. As my local Macon TV announcer would say, 'That's my opinion -what's yours?' -Gilbert Held