US Congress seeks global e-commerce tax ban

The US House of Representatives has called on the Clinton administration to seek a permanent moratorium on international e-commerce tariffs at next month's World Trade Organisation meeting in Seattle.

The US House of Representatives has overwhelmingly passed a resolution calling on the Clinton administration to seek a permanent moratorium on international e-commerce tariffs at next month's World Trade Organization meeting in Seattle.

The resolution, introduced by Rep. Christopher Cox (a Republican from California) passed this afternoon on a 423-1 vote. An identical resolution sponsored by Sen. Ron Wyden (a Democrat from Oregon) is pending in the Senate and is expected to pass before Congress adjourns for the year.

The WTO adopted a temporary ban on international e-commerce tariffs in May 1998. The resolution passed today urges the administration to lobby the WTO to make the moratorium permanent. It also asks Clinton to lobby the Organisation for Economic Cooperation and Development, a trade group of 29 industrialized nations, to implement a ban on "special, multiple and discriminatory taxation of electronic commerce and the Internet." Lastly, the resolution calls on Clinton to oppose a United Nations proposal establishing a "bit tax" on electronic transmission of information.

"A global free trade zone on the Internet will have immediate advantages for Americans," said Cox. He called the UN. bit-tax proposal an "obviously discriminatory levy aimed at electronic commerce."

The United Nations proposal was spurred by concerns that developing nations lack the money to jump on the e-commerce gravy train. A UN report issued in July noted that there are more computers in the United States than there are on the rest of the planet. It also estimated that, while the average American spends one month's salary to buy a computer, the average Bangladeshi must shell out eight years' worth of earnings to do so.

A permanent ban on international e-commerce tariffs enjoys wide support in this country, and the administration has already said it will seek such a ban at the WTO meeting. But opposition is likely to arise in Seattle from developing nations, which are reluctant to forgo permanently a potentially lucrative source of revenue.

Earlier this month, Deputy US Trade Representative Susan Esserman told a congressional committee that the US delegation had a better chance of winning an extension of the temporary moratorium rather than a permanent ban.

Cox and Wyden have emerged as congressional leaders on the subject of e-commerce taxation. The two legislators sponsored the Internet Tax Freedom Act, passed a year ago, that imposed a three-year ban on domestic e-commerce taxes. The bill also established a blue-ribbon commission to study the issue. That commission, which is still deliberating, is scheduled to send its recommendations to Congress next April.

During debate on the resolution today, Rep. Jim Moran (Democrat from Virginia), whose district includes many of the Washington area's high-tech firms, said that the needs of domestic e-commerce must be balanced with the needs of state and local governments and brick-and-mortar merchants.

"It's not fair to have retail establishments taxed and people selling the same products [online] not taxed," Moran said. "That's got to be resolved."

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