Delay of Tax-Free Internet Bill Poses Significant Threat to Future of Electronic Commerce

June 26, 1997

(Washington, DC) — CCIA Executive Vice President Glenn Davidson is today expressing the Association’s disappointment that progress on the “Internet Tax Freedom Act” (S. 442) has been derailed.

“This is not simply an issue of states’ rights. The full development of the Internet as a legitimate marketplace is at stake. If state and local governments are free to impose a mish- mash of undue tax and tariff burdens upon online purchases, the capacity of the Internet for electronic commerce could be greatly diminished,” Davidson said.

“No one ever indicated that this measure would block all state and local taxes on online transactions. What this legislation correctly proposed was a temporary moratorium on the multitude of conflicting state and local taxes until uniform policy recommendations could be suggested for all states — in consultation with all vested interests.

“We’re not just talking about the average mail-order catalog business here. The potential of online commerce is expected to top 1 billion dollars next year — and the business is still in its infancy,” he said.

“Furthermore, there clearly are national interests at stake here. The United States needs to set an example on electronic commerce taxation before we can expect foreign governments to follow our lead in making the Internet a duty-free zone. CCIA applauds the vision of Senator Wyden and Congressman Cox in recognizing that the Internet may well become the vital link to democracy in countries like China, let along the most cost-effect means for small businesses to market and sell their products overseas. Let’s not choke its potential over jurisdictional concerns. We urge the Senate Commerce Committee to advance this important bill.”

The Computer & Communications Industry Association (CCIA) is an association of computer and communications industry firms, as represented by their most senior executives. Small, medium and large in size, these companies represent a broad, cross-section of the industry, employing over a half million workers and generating annual revenues beyond 200 billion dollars.

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