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Taxing News
Entrepreneur, Feb, 2000
All good things come to an end--as might the tax-free Internet.
The money grab is overdrive. Cities, counties and states, wowed by e-commerce, want their taste of Net profits--namely, the sales tax revenues government officials say they're losing when buyers shop online.
A Congressional Advisory Commission on Electronic Commerce is busily chewing on these complaints, but for now there's little local officials can do. The Internet Tax Freedom Act, a federal law enacted in October 1998 and to remain effective until 2001, prohibits the imposition of sales and use taxes on Internet access charges or any discriminatory taxes on e-commerce.
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E-commerce players are up in arms nonetheless, mainly because the louder the howls get from local officials, the more probable it is that Congress will green-light some type of tax. Will that stifle the boom in e-commerce? A survey by consumer research outfit BizRate (www.bizrate.com) found that 75 percent of online buyers say they'll spend less on the Internet if sales taxes are instituted.
In the meantime, a survey by Stamford, Connecticut, Internet market research firm @plan found 73 percent of active adult Internet users opposed an Internet sales tax, and 58 percent said they believed a sales tax would hurt Internet retailing.
Will government officials get their way by imposing new taxes on Internet users? Track developments and send comments on the issue to your representative or senators by logging on to the advisory commission's Web site (www.ecommercecommission.org).
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