WASHINGTON, Oct. 10 (UPI) -- The House Judiciary Committee on Wednesday sent to the House floor a bill to extend by 2 years the current moratorium on Internet access taxes and taxes that discriminate against Net activities.
The committee took up the bill to try and beat the moratorium's Oct. 21 expiration date. Rep. Bob Barr, R-Ga., said the 1998 Internet Tax Freedom Act set up the ban in order to keep Net connections affordable for all, and to prevent Internet commerce from facing taxes not applicable to its offline counterpart.
"Since passage of the act, online commerce has seen steady growth rates, but predictions the Internet would quickly dominate all retail sales have failed to materialize," Barr said.
Another area of taxation affecting the Net is state sales taxes, which are presently difficult to apply to e-commerce. Rep. Spencer Bachus, R-Ala., introduced an amendment to remedy the situation, giving the states legal authority to develop a uniform, streamlined sales tax system. Barr objected, pointing out that the bill's language was limited to access and discriminatory taxes, and the amendment was excluded from discussion.
Bachus then submitted amendments to shorten the ban's extension. The original bill made permanent the access tax ban, and extended the discriminatory tax ban for five years. Bachus said the bill would arbitrarily repeal existing Net taxes protected by a grandfather clause, and suggested limiting the extension on both bans to only eight months, matching a current Senate proposal.
Extensive non-partisan debate followed, with two basic arguments. Bachus and those supporting the amendment said the change would spur state action on the sales tax issue. Giving the states too much time could cost them billions in revenue and lead to layoffs among public service employees, said Rep. William Delahunt, D-Mass.
Barr and other opponents said eight months was far too short a time for the states to reach a useful conclusion. The amendment was a back-door attempt to reach the same goals as Bachus' first proposal, opponents said.
The 8-month ban was rejected on a 19-12 vote, largely along party lines. A second amendment to set the extension at two years faced much the same debate, but passed 19-15 in a largely non-partisan vote. The amended bill was then reported favorably to the House floor on a voice vote.
The committee also considered the Financial Services Antifraud Network Act of 2001. The bill would require stock market, insurance, and other financial regulators to use the Internet and other data-sharing technology to create a network for sharing antifraud information.
The bill's intention is to give regulators the tools to prevent known fraudsters from obtaining licenses or taking part in other financial activities. The network would include privacy features and only contain rulings and other concrete actions against individuals, not rumors. If regulators failed to create a network within two years, the bill would mandate a liason committee, drawn from regulator and law enforcement agencies, be formed in its stead.
Some members raised concerns the bill would give the General Accounting Office too much audit power over state regulatory agencies, or didn't go far enough in protecting privacy. The only amendment offered, however, dealt with allowing regulators to prevent disclosure of sensitive information. The amendment passed on a voice vote, and the bill was reported favorably to the House floor on another voice vote.
