In a move that could have global ramifications, the US Congress is to consider legislation to declare the Internet a tax-free zone.
A number of US states and federal authorities are keen to impose new sales and usage taxes on Internet service providers as a way of increasing income. ISPs object to this idea, arguing that they already pay telecomms-related taxes and that any additional levies would stifle growth of the Internet market.
At Internet World in Los Angeles, two Congressmen - Republican Representative Chris Cox and Democrat Senator Ron Wyden - laid out legislation to protect the ISPs in the shape of their proposed Internet Tax Freedom Act.
If passed in its current form by Congress, the Act would ensure that there can be "no tax imposed ... on Internet or interactive computer service activity". The Act also calls for no taxation of electronic commerce and turns the Internet into an international duty-free zone.
Congressional approval would set a global precedent in the field of Net taxation. European Union tax authorities are considering similar proposals to impose some form of levy on ISPs and network providers.
Wyden said he hoped the legislation would make it through Congress for presidential approval by the end of the summer. "Any new cybertaxes will lead to a hodge-podge of overlapping, conflicting and burdensome taxes that will hurt businesses and consumers," he said, calling for a concerted lobbying of Congress by the Internet community.
The Bill is likely to receive a sympathetic hearing in Washington. President Clinton?s special adviser on electronic commerce, Ira Magaziner, has already stated that the administration feels no new taxes should be imposed on Web-based transactions.
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