A panel convened by the US government failed to reach a consensus on internet taxation this week, leaving the opposing sides to lobby lawmakers.
Negotiations held by members of the Advisory Commission on Electronic Commerce over whether to tax ecommerce transactions failed to produce the two thirds majority required to create a recommendation to send to the US Congress.
The commission, created by the US 1998 Internet Tax Freedom Act, has another month to issue its report to Congress, but this week's meeting was the final one scheduled. Without a recommendation from the commission, Congress will have make its own decision about internet taxation after a temporary ban runs out in October 2001.
The meeting was attended by three distinct divisions. Conservative commission members, led by Virginia Governor James Gilmore, want to cut current taxes on telecoms services and prohibit future taxes on internet sales.
On the opposing side, a group led by Utah Governor Michael Leavitt and including several US state and local government officials wants to give states the right to tax ecommerce transactions. They argue that state and local governments are losing tax revenue.
A business group attempted to carve out middle ground by proposing to grant tax cuts to the anti-tax factions while still holding out hope that states could eventually tax web-based transactions. However, the proposal failed to achieve the needed so-called super majority.
In the light of the failed negotiations, both sides have begun efforts to lobby lawmakers.
Anti-tax group Citizens for a Sound Economy has posted a petition encouraging Congress not to enact internet taxes and the body aims to gather one million signatures.
In the meantime, the National Retail Foundation (NRF) - a trade group that includes more than 1.4 million US retailers - has criticised the commission's failure.
"NRF, on behalf of the retail industry, opposes any solution that creates or maintains an unlevel playing field between traditional and internet sales," said the group in a statement.
"Retailers oppose any new taxes on the internet. All retailers are asking for is tax equity, where the same product is taxed the same regardless of how it is ordered or delivered."
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