Innovation Policy Post

Leesburg, Va. – As a round of negotiations on the Trans-Pacific Partnership begins, public interest groups are joining members of Congress in their call for more transparency of the key nine-country trade agreement that’s being billed as the 21^st Century Trade Agreement. Canada and Mexico are scheduled to join the next round of talks in December and the treaty is expected to cover broad trade provisions for nations that make up a third of the world’s economy.

The Senate Committee on Commerce, Science and Transportation held a hearing on “Marketplace Fairness: Leveling the Playing Field for Small Business” this month.  Unfortunately, the substance of the hearing had very little to do with the laudable title, as it dealt with the Marketplace Fairness Act, which would shift the burden of tax collecting requirements to online retailers regardless of physical presence.  In contrast with other senators on the committee who seemed to accept the premise that it was somehow fair to impose a tax collection mandate on small online businesses over thousands of tax jurisdictions, Sen. Jim DeMint (R-SC) and Sen. Kelly Ayotte (R-NH) demonstrated their understanding both of the compliance burdens such a mandate would entail, and also of the value of different business models.  

CCIA was pleased to learn senators added provisions to better protect digital goods ahead of the U.S. Senate Finance committee markup a bill today to permanently normalize trade relations (“PNTR”) with the Russian Federation and Moldova. CCIA issed a news release asking for better trade protections online after the Russian parliament’s vote to blacklist websites and allow them to be shut down.

As Matt Schruers writes in his blog post for CCIA's DisCo Project, "One aspect of the proposed mark-up that merits attention is that it would require the USTR to report on barriers to digital trade in Russia.  The bill achieves this by amending an existing international review process – the Trade Act of 1974’s so-called “Special 301” review– to also identify “laws, policies, or practices” that “deny fair and equitable treatment to U.S. digital trade.” For more please see his complete post: 

CCIA has grave concerns about legislation passed yesterday by the Russian Parliament that would establish a blacklist of websites that government could shut down, and hopes U.S. trade officials weigh this development. While the legislation is ostensibly targeted at child pornography and sites promoting suicide or substance abuse, the establishment of a government blacklist framework is a severe blow to Internet freedom and could be the first step on a path that leads to complete censorship and control of online information by an increasingly authoritarian Russian government.  

Last week, the House Judiciary Committee passed the Manager's Amendment of H.R. 1860, the Digital Goods and Services Tax Fairness Act, by voice vote.  The bill establishes a national framework for how state and local taxes apply to digital goods and digital services so as to prevent multiple and discriminatory taxation.  CCIA welcomes committee passage of this legislation as we believe it recognizes the importance of innovation and the need to provide for the continued development of the growing digital marketplace.  

The Senate Finance Committee held an April 25th hearing on “Tax Reform: What It Means for State and Local Tax and Fiscal Policy.”  Within the broader theme of the hearing, there was a lively exchange on the issue of online sales tax collection that illustrated supporters’ misperceptions regarding the compliance burden for small online retailers.