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Senators propose permanent ban on internet sales and access tax

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Two members of the Senate Commerce Committee have introduced a mini-bill that would permanently block both taxes on internet access and "multiple and discriminatory taxes" against e-commerce.

"E-commerce is thriving largely because the internet is free from burdensome tax restrictions. Unfortunately, tax collectors see it as a new revenue source, and they must be stopped," said co-sponsor Kelly Ayotte (R-NH). "This legislation will provide certainty to the marketplace, helping the Internet continue to be a driving force for jobs and growth."

The Permanent Internet Tax Freedom Act (S. 31), which Ayotte proposed with Senator Dean Heller (R-NV), is a marvel of brevity. It simply amends one clause to the current 1998 Internet Tax Freedom Act by replacing the phrase "taxes during the period beginning November 1, 2003, and ending November 1, 2014" with just the word "taxes."

The net effect for the e-commerce industry if the bill passes is that everything stays the same. States can levy sales taxes on goods bought online, but not add extra charges for inter-state traffic. State sales taxes can still be applied however, where they have been enacted.

Such taxes are currently in place in states like New York and California, and while Amazon and others fought hard against them, the e-commerce lobby now seems to have accepted that it can't be tax-free. Local sales taxes aren't too high a price to pay, considering the disadvantages faced by the competition.

Physical stores are limited by stock and distance, maintaining a physical presence, and paying staff to work in a shop people actually want to visit. Long-term staff are also valued, because they both know where things are and can advise people, as well.

E-commerce vendors still get to use cheaper, casual labor in low-regulation states, well away from any expensive commercial properties, and can run a work atmosphere not conducive to civilized shopping. Shipping adds additional costs, but the savings more than make up for it.

The other benefit of the bill is maintaining the untaxed status of internet access and it's a nice fillip for all users. Since the bill proposes no new taxes of any kind, it might actually get Republican support and have a shot at getting passed, if the Democrats agree. Mind you, with the way American politics is these days, nothing is certain.

"Every American should be able to access the internet without penalties from the federal government," said Senator Dean Heller. "The Internet Tax Freedom Act will ensure a long-standing federal policy that prevents the government from raising taxes, and preserves the Internet as a tool for education and innovation." ®

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