THE INTERNET'S DAYS AS A TAX-FREE ZONE ARE NUMBERED
The sales tax, also known as the excise tax, is one of the
oldest, and therefore one of the most reviled, of all levies.
Revolutions and rebellions have been fought over it. But the battle
today over whether to tax Internet sales, while not violent, is as
heated as any. Even Republicans, who almost never disagree about taxes,
are at each other's throats on the issue. Virginia governor Jim Gilmore
opposes new taxes on e-commerce as a way to spur the Net, while Utah
governor Michael Leavitt thinks online sales must be taxed to keep state
and local governments solvent. A congressional commission that was
supposed to settle the issue ended in deadlock earlier this year.
Citizens have every right to grouse about the ill effects of
sales taxes on Net growth, but the right of governments to impose them
isn't in dispute. What's more, lawmakers don't have much of a policy
reason not to apply a sales tax to commerce over the Internet. Thus the
surprise of the Internet debate: Despite all the hyperbole pouring out
of the mouths of politicians lately, cyberspace almost certainly won't
remain a (nearly) tax-free zone forever. For now, the federal government
has imposed a moratorium on new Internet taxes through October 2001.
In the present context, levies are