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White House Backs Internet Access Tax Ban, Calls for Simple E-Commerce Sales Tax

12 December 1999

In a statement clearly designed to influence proceedings at this week's ACEC hearings in San Francisco, a White House spokesman who refused to be named, said last Friday that the Clinton Administration supports a ban on internet access taxes but favours a simplified sales tax structure for e-commerce transactions. The spokesman also said that the Clinton administration favours a moratorium on international taxes on electronic transmission.

The low key statement is the first reaction from the White House to the flurry of internet tax plans that have been touted over recent weeks in preparation for this week's ACEC hearings. The most prominent of these plans are Virginia Governor and ACEC Chairman James Gilmore's plan to exempt online purchases from sales taxes and Utah Governor and ACEC Member Mike Leavitt's plan to collect sales tax via 'trusted third parties', which is also backed by the National Governors Association.

The Clinton aide who made the statement to the media described the Gilmore plan as 'troubling', saying that with the Internet in its infancy, this isn't the time to radically alter tax policy. Instead the Clinton aide suggested that ACEC should 'carefully examine' the Leavitt plan to simplify sales tax collection, although he did concede that there were legitimate privacy concerns that would need to be addressed in order for it to have a chance of being adopted.

The White House criticised the Gilmore plan on the basis that it would initially provide online merchants with an unfair advantage and could eventually also encourage 'bricks and mortar' retailers to avoid sales tax by using in-store Internet kiosks to process purchases in order to compete.

But the Clinton Aid also warned States that it was too early to start collecting sales taxes on internet transactions as a "real consensus" would first be required on how to simplify the collection of tax across America's 7,500 different tax jurisdictions.

In response to the White House comments, a spokesman for Governor Gilmore Miner said the Clinton administration "appears to be misinformed" about the Governor's policies, as it only proposed to ban taxes on remote e-commerce transactions facilitated by the internet, thus preventing retailers from using in-store e-commerce kiosks to avoid local sales tax.


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