Californian governor vetoes Internet tax

California governor Gray Davis has vetoed a bill that would have imposed a state sales tax for retailers who process orders over the Internet.

California governor Gray Davis has vetoed a bill that would have imposed a state sales tax for retailers who process orders over the Internet.

The bill, called AB2412, would have forced businesses that operate at physical locations within California and online operations to tax California residents who buy products online.

"In order for the Internet to reach its full potential as a marketing medium and job creator, it must be given time to mature," Davis says in a statement. "At present, it is less than 10 years old. Imposing sales taxes on Internet transactions at this point in its young life would send the wrong signal about California's international role as the incubator of the dot-com community."

Davis also signed a bill calling for a three-year moratorium on Internet access taxes, and another bill to create a commission to examine sales-tax issues regarding the Internet. The bill, introduced by state senator John Vasconcellos (Democrat, Santa Clara), creates the California Commission on Tax Policy in the New Economy, which will develop a long-term strategy for state and local tax structures related to the Internet.

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