The US Treasury department said Friday it was backing the congressional proposal to bring in a three year moratorium on Internet taxation.
Joseph Guttenberg, Treasury deputy assistant told a Senate committee that it wants to avoid duplicatory or discouraging taxes on Internet business and wanted international adoption of the principle.
"To encourage the growth of this technology and the resulting social and economic benefits, it is crucial that governments act responsibly and fairly regarding the Internet and electronic commerce. The Clinton administration's key objectives are no new Internet taxes and neutrality in taxing electronic commerce," he said.
The Internet Tax Freedom Act would not include federal taxes - similar to VAT - or taxation on Internet access services under certain conditions. It would head off the threat of different US states charging different amounts of local tax and either discouraging or distorting ecommerce development.
Critics have targeted the fact that the US could benefit most from international Internet taxation protection as it is a leader in fields such as entertainment, software and financial services, which could be sold online.
The European Union has been less than keen to back US policy in this area, believing the country is acting more in its own interest than globally as it claims. UK Customs and Excise has expressed concerns that in the long term the Internet could dissolve a significant part of this country's tax base.
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