A draft bill currently under review in the US that would allow
for individual state and local government to tax internet sales has
faced opposition from the high-tech industry, business groups, and
the leader of the US House of Representatives Dick Armey.
Mr Armey said on Wednesday that he would look for three to five
year extension to a ban on internet sales taxes. The current ban is
due to expire in October. However, Mr Armey said he would not be
seeking a permanent ban.
An extension to the moratorium would block the attempt by
individual states to legislate for a change in the position on
taxing e-commerce. Currently, a 1992 US Supreme Court decision
prevents states from collecting any form of sales tax unless the
retailer has a physical presence in that state. The states are
worried that, with the continued growth of e-tail, their tax
revenue will drop significantly without some provision for taxing
on-line retailers.
Talks between groups of senators over the proposed bill stalled
this week after business groups objected to the lack of rules to
compel states to simplify their tax regulations, claiming current
regulations are an unfair burden on e-commerce.
As the draft currently stands, Congress would allow internet
sales taxes if at least 25 states approve a tax simplification plan
developed by the National Governors Association. The plan does not
set specific tax levels but seeks to simplify the thousands of
sales and uses taxes through a set of standardised definitions of
goods.
