The Administration supports a permanent moratorium on taxation of
Internet access and opposes multiple and discriminatory taxes on the
Internet. The Internet is a fast-developing mode of commerce where the
technology and the economics change very rapidly. Five years is a very
long time in the fast-moving virtual world. Therefore, the many open
questions concerning Internet taxation should be resolved in "Internet
time" and not postponed for an additional five years.
The Administration would support a two-year extension of the current
moratorium. H.R. 3709's proposed extension of the current moratorium,
through 2006, would in effect enact a five-year hold on any further
consideration of Internet tax issues, creating uncertainty in a vital
and rapidly growing industry. In addition, the proposed five-year
extension would significantly reduce the incentive for States to
simplify their tax systems right now, to the detriment of all interested
parties, particularly small businesses. Tax simplification and clarity
in the responsibility for tax payment are essential for the
establishment of a level playing field among different types of
businesses, including both Internet and main-street firms. The
Administration opposes H.R. 3709 because it will delay consideration of
important Internet tax issues and will hinder, not foster, tax
simplification efforts by the States.
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