May 24, 2001 Senate Rejects Extending Internet Tax Moratorium Without Dealing with E-Fairness Though competing bills regarding Internet taxation have been introduced in the U.S. Senate, ABA and other e-fairness advocates were cheered last week not by a winning vote but by an amendment's defeat. On May 21, the Senate voted 88 to 11 to oppose an amendment offered by Senator Robert C. Smith (R-NH). The Smith amendment would have permanently extended the current moratorium on Internet access without resolving the larger issue of the collection of sales and use taxes on remote sales. "This vote was clearly a blow to those who would create a special tax-free haven for a particular segment of the economy," said e-Fairness Coalition Executive Director Lisa Cowell. "We cannot have two different sets of tax rules-one for those who conduct their business via the Internet and one for those who do business over the counter. It is clear after last night's vote, 88 senators believe in tax equity." ABA and a number of the regional booksellers associations, as well as many other retailers and businesses nationwide, are members of the e-Fairness Coalition. Senate Commerce Committee Chairman John McCain (R-AZ) and Senators Byron Dorgan (D-ND) and Ron Wyden (D-OR) have all introduced competing Internet taxation bills and were involved in negotiations earlier this month, which have not yet resulted in compromise legislation. Under the broad outlines of a possible agreement, after a minimum number of U.S. states simplified their sales tax regulations they would be allowed to require online retailers to collect sales taxes. In addition, Congress would extend the current moratorium on any new taxes on the Internet until 2006. The current moratorium is set to expire in October. Following the defeat of the Smith amendment, Cowell noted that "for more than 18 months we have been working with Congressional leaders from both parties to resolve the issues surrounding Internet taxation in a fair and comprehensive manner. Last night's victory was a giant step in the right direction." She said that the coalition was especially grateful for the support of Senators Dorgan, Mike Enzi (R-WY), Kay Bailey Hutchison (R-TX), and Bob Graham (D-FL). Cowell said that the coalition was "look[ing] forward to completing this process along with them and others in the Senate including Commerce Committee Chairman Senator John McCain, who has been leading negotiations on a compromise bill. Under their guidance, we will achieve tax equity." Cowell applauded the Senate negotiators for their efforts and said the compromise legislation would bring a balanced, bipartisan approach. "This legislation would help to create a climate in which Web-based firms and Main Street businesses alike can co-exist and compete on fair and even terms," Cowell said. The e-Fairness Coalition represents over 1.5 million brick-and-mortar and online retailers, retail associations, publicly and privately owned shopping centers, the Newspaper Association of America, and members of the high-tech community such as Gateway and Vertical Net. Topics: Internet Commerce, Sales Tax Initiative,