[Congressional Record Volume 144, Number 16 (Thursday, February 26, 1998)]
[Senate]
[Pages S1060-S1061]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                TAX MORATORIUM ON INTERNET TRANSACTIONS

  Mr. GREGG. Mr. President, the administration comes in for a fair 
amount of criticism from our side of the aisle, and I think most of it 
is well directed. So when they do something that is positive and which 
is, in my opinion, proper policy, it should also be acknowledged.
  The administration's decision today, the White House decision, the 
decision of the President, as presented by the President's people at 
Treasury, Deputy Secretary Summers, to put in place a moratorium, or 
send up legislation to put in place a moratorium on any tax relative to 
transactions over the Internet which States might try to assess is the 
absolute right decision.
  I know that the Governors of the different States were in Washington 
this week, and that they made one of their priorities the ability to 
assess a tax on transactions which occur over the Internet. That is 
wrong. The Internet is obviously the last Wild West of American and 
world entrepreneurship. It is an explosive technology of which, as we 
all know, we have only seen the tip of the iceberg.
  I can't think of any quicker way to retard that explosion of 
technology, creativity, entrepreneurship, and the prosperity which will 
arise from it, than to create a hodgepodge of taxation across this 
country assessed against the Internet by each State. I can't think of 
anything that would have a more chilling effect on the capacity of 
people using the Internet to participate in transactions involving 
commercial sales than if they were subjected to a tax policy which 
would vary from border to border, and probably within States from 
community to community.
  This would definitely undermine the condition in which the Internet 
has become one of the more effective ways that this Nation markets its 
products, not only within the United States but internationally. It 
would also undermine our capacity as a Nation to speak to other 
countries in this world which might be considering putting a tax on the 
Internet or Internet transactions, which would create a waterfall 
effect as other nations tried to join into it. It would be truly not 
only a bad example, it would end up being an incredibly bad policy for 
our Nation as a world leader in the area of technology. So the White 
House has chosen the right course here.
  I recognize that for years many of the Governors have sought the 
ability to tax interstate sales which occur through the mails. The 
Bellas Hess case has been the law of the land, which says that is not 
something that States can do and that the catalog companies that are 
based around the Nation, when they sell through the catalogs, are not 
subject in many instances to the sales taxes of the local States. I 
happen to think that is also the correct policy, but I recognize that 
many of the Governors do not.

[[Page S1061]]

  However, if they have a grievance with the issue that addresses the 
sales through catalogs, then that issue should be separated and settled 
independent of the Internet, and that issue should be settled first 
before we move into the Internet. They should not use taxation of 
transactions over the Internet as an attempt to leverage the issue of 
taxing catalog sales across the country, and that is basically what the 
goal of the Governors was here. They obviously cared about the Internet 
tax policy, but they were more interested in trying to get the catalog 
sale issue, which is a much bigger item right now--maybe not in the 
future, but right now--for these States.
  But in trying to do that, the Governors have, unfortunately--and 
speaking as a former Governor, I say that with genuine regret--pursued 
a policy which is wrong. Added taxes are not a good idea in most 
instances anyway, but added taxes which would be assessed across this 
country in all sorts of different varieties against the Internet 
transactions would undermine, as I mentioned, one of the great 
entrepreneurial issues, certainly in the latter half of this century 
and potentially as we go into the next century, for the beginning of 
the next century.
  I congratulate the White House for its decision to send up to the 
Congress a moratorium on any taxes which might be assessed by States 
against the Internet. I will strongly support that moratorium. I look 
forward to prompt action on it.
  I yield back my time and make a point of order a quorum is not 
present.
  The PRESIDING OFFICER (Mr. Gorton). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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