Bill Clinton has been criticised by the European Commission (EC) and his own state governors for his controversial decision to suspend taxation on the Internet.
Clinton last week backed legislation that effectively places a moratorium on Internet taxation to allow what he sees as "the (Internet's) enormous growth potential". The Internet Tax Freedom Act, currently passing through Congress, prevents any merchant paying tax on the Internet, regardless of which state or country they are in.
President Clinton believes taxation on the Internet "would stifle" its growth. He said: "There should be no special breaks for the Internet, but we can't allow unfair taxation to weigh it down and stunt the development of the most promising new economic opportunity in decades."
However, an association of US state governors thinks differently. The US National Governor's Association voted overwhelmingly last week for the right of individual states to levy taxes on Internet use. That resolution cannot pass into law without the approval of Congress and the President.
Clinton's views were also shot down by the European Commission. European commissioner for IT and telecoms, Martin Bangemann, criticised the US position, arguing all transactions should be taxed, "whether they occur over the Internet or not".
David Kennedy, chief executive of ISPA, agreed in part with Bangemann's sentiment, but, like Clinton, voiced concern about the Internet's growth if new taxation should be imposed on it.
"There is taxation on the Internet already and we're not advocating a tax-free Internet, just fair taxation for everyone," he said.
America has already blocked calls for the so-called "bit taxes", which would accure on each unit of data downloaded from the Internet - exactly the sort of taxation Kennedy does not want to see.
"New or Internet specific taxes are not at all helpful. If companies are to look to the Internet as a way of doing business, we should be making it easier for them, not taxing them extra," he said.
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