Congressmen introduce act to permanently ban Internet taxes

The three-year moratorium on Internet taxes enacted by Congress in October 1998 would be made permanent under a bill proposed Thursday by three lawmakers.

Sen. Ron Wyden (D-Ore.) joined Rep. Bob Goodlatte (R-Va.) and Rep. Christopher Cox (R-Calif.) in introducing the Internet Non-Discrimination Act, a bill that would institutionalize the temporary moratorium on taxing Internet transactions. The act will be referred to the House Judiciary Committee, of which Goodlatte is a member.

"We must continue to ensure that the Internet remains free from reckless, restrictive taxation by making the tax moratorium permanent," Goodlatte said in a release.

Many state and local government officials, including the National Governors' Association and the National League of Cities, have said excluding Internet sales from tax is a pre-emption of local taxation laws. They say the loss of sales-and-use taxes from Internet transactions will deplete local revenues and cripple traditional retailers.

"The dire predictions of state and local officials didn't come true," Wyden said Wednesday at a Senate Budget Committee hearing. "Revenues are up, Main Street retailers are expanding and setting up online. It's the convergence of the new economy with the old economy."