Congressman Wants Internet Sales Taxes Permanently Banned

U.S. Representative John Campbell, R-Calif., introduced on Friday legislation to permanently protect Internet commerce from discriminatory taxes and disallow taxation on Internet use.

The new bill amounts to an amendment of the 1998 Internet Tax Freedom Act, which is set to expire in November 2007. Campbell is seeking to extend the deadline on the tax ban indefinitely.

"Members of congress put a 'sunset' in the bill, which means that it remains in effect for a while and then expires," Campbell said in an interview. "I think we have enough experience now with the Internet and what it has done and can do for commerce and communication, that we should make that ban on taxation permanent."

Former California congressman and current SEC chairman Christopher Cox authored the original bill in a bid to promote and preserve the commercial potential of the Internet.

The bill likens the Internet to a form of interstate and international commerce. It prevents the creation of new state and local taxes on Internet access and bans taxes that discriminate against e-commerce.

"We don't want to retard the growth or use of the Internet by having states or localities tax it," said Campbell. "So, if the state of California decided 'We're going to put a tax on shoes sold on the Internet, because there are lots of shoes being sold and we want to make money off of that,' this prohibits that from happening."

The Internet Tax Freedom Act prohibits taxes on three different levels: access, use and discriminatory taxes.

In terms of access, the bill would disallow local governments from taxing the traveling of information across a broadband network to the users' computer. In addressing "use," the bill would ban taxation on such services as e-mail.

To discourage discriminatory tax practices, the bill would prohibit state governments from mandating a tax on Internet sales.

"I oppose taxes on Internet use, period — from federal, state or any other government," said Campbell. "I think this bill symbolically says that we, the federal government, don't believe that anyone should be taxing the Internet."