The electronic superhighway is becoming an ever more important forum for commerce, and states want a piece of the action. But just as American colonists resisted British attempts to tax paper and tea, American citizens should bar states from taxing online transactions.
An important battle over Internet taxation has been fought within the Advisory Commission on Electronic Commerce, created by Congress to study the issue. In attempting to write its report, due in April, the commission was riven with acrimonious debate. Storefront retailers were determined to see their online competitors suffer under the heavy hand of government.
A majority of ACEC members voted to support extension by five years of the existing moratorium on new state taxes on the Internet and elimination of the 3 percent federal-excise tax on telephone services. But advocates failed to reach the necessary majority of 13 (out of 19) members necessary to make the recommendation official. The biggest fight occurred over "nexus" issues, that is, when online retailers had a large enough physical presence in a state to warrant collection of sales taxes.