HR 3709 -- 05/10/2000

May 10, 2000

H.R. 3709 - Internet Nondiscrimination Act
(Cox (R) CA and 12 cosponsors)

The Administration supports a permanent moratorium on taxation of Internet access and opposes multiple and discriminatory taxes on the Internet. The Internet is a fast-developing mode of commerce where the technology and the economics change very rapidly. Five years is a very long time in the fast-moving virtual world. Therefore, the many open questions concerning Internet taxation should be resolved in "Internet time" and not postponed for an additional five years.

The Administration supports an amendment that may be offered by Representative Delahunt (D-MA) and Representative Thune (R-SD) which would provide for a two-year extension of the current moratorium. H.R. 3709's proposed extension of the current moratorium, through 2006, would in effect enact a five-year hold on any further consideration of Internet tax issues, creating uncertainty in a vital and rapidly growing industry. In addition, the proposed five-year extension would significantly reduce the incentive for States to simplify their tax systems right now, to the detriment of all interested parties, particularly small businesses. Tax simplification and clarity in the responsibility for tax payment are essential for the establishment of a level playing field among different types of businesses, including both Internet and main-street firms. The Administration opposes H.R. 3709 because it will delay consideration of important Internet tax issues and will hinder, not foster, tax simplification efforts by the States.