Innovation Policy Post

On February 14, another version of the Marketplace Fairness Act was introduced in the House and Senate. Like its previous incarnations in past Congresses, this bill would give states the authority to require out-of-state online retailers to collect sales and use taxes on purchases made to residents of their states -- regardless of physical presence in those states. CCIA has consistently opposed such legislation as saddling small Internet retailers with the burden of collecting taxes across thousands of jurisdictions, and penalizing them for daring to utilize the Internet for a new business model. As supporters of this bill have described it in terms of “fairness” and “leveling the playing field,” let us examine how accurate this language is.

Last year, CCIA consistently opposed efforts to pass legislation that would force online retailers to collect sales and use taxes regardless of physical presence.  Last month, we opposed an attempt in the lame duck session to attach such a bill to the defense authorization bill.  In light of such back door efforts, as well as the stated determination by proponents in Congress to continue to push for legislation in the new Congress, we remain vigilant against any further attempts to misleadingly frame the issue as one of fairness and leveling the playing field.  One Reuters article in the aftermath of the holiday shopping season caused us concern by seeming to conflate Amazon.com, which is a retailer with both physical and online operations (“click and mortar”), and Internet retailers with no physical presence.  

On Dec. 6, the United States Senate voted to approve legislation extending permanent normal trade relations to Russia. Coming on the heels of the House vote last month, this action marked the final chapter in a Congressional debate over Russia and how to find a balance between trade promotion and human rights. Internet censorship is an issue with implications for both, and a digital trade provision in the PNTR legislation could be a first step towards utilizing trade enforcement to combat it.

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: