What's New

Zack Hutchins
Director of Communications

November 20, 2001

After Council advocacy, Congress extends Internet tax moratorium for two years

After The Business Council mounted strong opposition to proposals to tax Internet-based commerce, Congress voted to reject Internet taxes and instead extended for two years the current moratorium on Internet taxation.

The moratorium was extended Nov. 15 on a voice vote.

Late that afternoon, The Business Council, working with PinPoint Communications of Albany County, launched an urgent "electronic advocacy" campaign to urge New York's Senators Charles Schumer and Hillary Rodham Clinton to support the moratorium extension.

The Council asked members of its Electronic Commerce Committee to visit a site on the Internet from which they could automatically launch faxes in support of the tax moratorium to Senators Schumer and Clinton.

In only a few hours of activity, 53 faxes to the senators' offices were generated, said Diana Ehrlich, The Council's legislative analyst specializing in electronic commerce.

The day before, Business Council President Daniel B. Walsh wrote to Senators Schumer and Clinton urging them to extend the moratorium and reject "tax simplification" proposals that would have enabled taxes on Internet commerce.

New York, Walsh wrote, "was one of the first states to exempt Internet access from sales taxes and it has taken a solid stance on not taking actions that will hurt the development of the Internet and e-commerce."

Ending the tax moratorium "would impose significant costs to both consumers and businesses," and uncertainty in rules after the moratorium lapsed would "impede business' ability to plan," Walsh wrote.

One "tax simplification" proposal being considered would have taxed only remote sales - which would have undermined Internet-based commerce, he added.

"If states are given the right to burden out-of-state sellers with tax collection obligations but can apply different rates and definitions to sales that take place in person, Internet and other remote sales will be disadvantaged," he said.

"Rather than force an ineffective compromise, the Senate should pass the extension that gives the states the time they need to achieve meaningful simplification and is supported by the states themselves."