House Policy Committee Chairman Christopher Cox (R-California) and Senator Ron Wyden (D-Oregon) launched a bipartisan effort yesterday that calls upon the Clinton administration to support a permanent moratorium on global Internet e-commerce tariffs at November’s World Trade Organization meeting in Seattle, Washington.
Cox and Wyden, who have become champions of the tax-free Internet cause in their respective chambers, have teamed successfully before. In 1998, the duo sponsored the Internet Tax Freedom Act (ITFA), which placed a three-year moratorium on Internet taxes at every level. They were also responsible for 1996 legislation that helped screen children from potentially harmful information on the Web.
Not Even Bit By Bit
Additionally, the Global Internet Tax Freedom Act flatly rejects the concept of a “bit tax” as a less imposing substitute for straight sales taxes. The UN-led proposal would place a tax on e-mail and other data sent via the Internet.
“To ensure that the global communications revolution is truly global, funding is required,” the United Nations Development Programme said in a report issued this summer. “Everywhere, Internet access divides educated from illiterate (60 percent of users in China have a university degree), men from women (in Brazil, 75 percent of users are men), rich from poor (a computer costs the average Bangladeshi more than eight years’ income, compared with one month’s wage for the average American), young from old (the average British user is under 30) and urban from rural.”
Cox and Wyden argue that even a “bit tax” would place an unfair burden on the developing businesses of electronic commerce and digital communications.
Forcing Clinton’s Hand
According to Cox, the Cox-Wyden plan will jumpstart the White House’s flagging interest in implementing a permanent tax moratorium. He argues that “Since Internet guru Ira Magaziner left the White House, the Administration has failed to show sufficient support for a permanent ban.”
The measure will call upon the World Trade Organization to preserve the taxation status quo, as none of the more than 130 WTO members have Internet taxes in place now. In addition, the bill will urge the Organization for Economic Cooperation and Development, which is also considering the issue, to reject any multiple, discriminatory or special taxes on the Internet or on e-commerce that could skirt a straight sales tax.