[Internet Taxes]

Melanne Verveer INTON LIBRARY PHOTOCOP Nicale Can you have smethe OTOCOPY ESERVATION keep teach 9 Clais from RETIRED HPC re: HRC HANDWRITING Internet taxter kids 0 Debate on Internet Taxes Takes Political Turn Milanna- Pts follow this wants to insure that all and David Pottruck, pres- By JERI CLAUSING sides get a fair hearing, ident of Charles Schwab, including whether sales voiced support for taxing Politics and business appear headed for a taxes even have a place on Internet commerce as clash when an elite group of high-technology the Internet. long as a new, simpler and and government leaders appointed by Con- "There are some folks equitable system could be gress to draft sales tax policies for the who are in the commis- devised. Internet meets in New York this week. sion and around the com- Although state and local At their first meeting this summer, in mission who do not be- governments the last four Williamsburg, Va., most in the group, the 19- lieve that this is the is- decades have been unable member Advisory Commission on Electron- sue," Mr. Gilmore said. to agree on a simple way ic Commerce, seemed to agree that Internet "They assume already to collect sales taxes from sales should be subject to the same taxes that taxes should apply to mail-order companies, levied on sales in the physical world. The the Internet and electron- some are optimistic that key question, they said, was how to devise a ic commerce, and they do the threat of losing huge more uniform tax rate or a system that not believe any discussion revenue opportunities made it easy for companies, whether big or ought to be held about Peter DaSilva for The New York Times from taxes on Internet small, to collect the taxes levied by more that." Gov. James Gilmore of Vir- sales might inspire a solu- than 30,000 state and local jurisdictions. The commission was tion. But the panel's chairman, Gov. James ginia heads the tax panel. created last year as part "We recognize that the Gilmore of Virginia, a Republican with an of Federal legislation im- present system is a mess aggressive antitax agenda, says he is not posing a three-year moratorium on any new and needs to be addressed through simplici- convinced Internet sales should be taxed. state or local taxes on Internet access or ty and uniformity," said Neal Osten, direc- That view has triggered suspicions sales. tor of the National Conference of State among some business members that their Composed of eight business representa- Legislatures' Commerce and Communica- colleagues from the political arena may be tives, eight politicians from state and local tions Committee. "We need to make it easi- inclined to stifle any solution that could be governments and three members of the er for companies to comply." construed as a new tax levy. Clinton Administration, the panel was sup- The commission also contains strong tax An aide to a high-technology representa- posed to begin work in December. But that opponents, however, like Grover Norquist, tive on the commission, who asked not to be was delayed when groups representing president of Americans for Tax Reform, identified, said a workable solution was be- state, county and city governments - con- who has proposed using the insurgence of ing circulated that called for businesses to cerned about losing the tax revenues that the Internet as an opportunity to get rid of collect sales taxes on Internet commerce if state and local governments agree to adopt pay for many crucial operations - com- sales taxes. plained that Congressional leaders had ap- Whether or not the commission can reach a single tax rate for each state or commit to new technologies in the form of free, easy- pointed too many business representatives. a consensus and draft a comprehensive to-use software to enable companies to cal- Adjustments were made, and those same proposal for Congress by next year, Gover- culate any tax rate. state and local groups expressed pleasant nor Gilmore says that at least it can clearly "Most of the commission members, plain surprise when many of the key business define the issues for Congress. In addition to as day, can see a deal right in front of members sided with them at the commis- sales tax, the group is expected to study them," said the aide. "But the commission sion's first meeting. international tax issues on the Internet and staff is pushing it away." C. Michael Armstrong, chairman and taxes on Internet access. He said the group Governor Gilmore denies trying to stifle chief executive of AT&T; Theodore Waitt, hoped to have a final report to lawmakers debate on any proposal and says he simply chairman and chief executive of Gateway, next spring.