[Congressional Record Volume 145, Number 130 (Thursday, September 30, 1999)]
[Senate]
[Pages S11735-S11736]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  SENATE CONCURRENT RESOLUTION 58--URGING THE UNITED STATES TO SEEK A 
  GLOBAL CONSENSUS SUPPORTING A MORATORIUM ON TARIFFS AND ON SPECIAL, 
      MULTIPLE, AND DISCRIMINATORY TAXATION OF ELECTRONIC COMMERCE

  Mr. WYDEN (for himself, Mr. Leahy, and Mr. Baucus) submitted the 
following resolution; which was referred to the Committee on Finance.

                               S. Res. 58

       Whereas electronic commerce is not bound by geography and 
     its borders are not easily discernible;
       Whereas transmissions over the Internet are made through 
     packet-switching, making it impossible to determine with any 
     degree of certainty the precise geographic route or endpoints 
     of specific Internet transmissions and infeasible to separate 
     interstate from interstate, and domestic from foreign, 
     Internet transmissions;
       Whereas inconsistent and inadministrable taxes imposed on 
     Internet activity by subnational and national governments 
     threaten not only to subject consumers, businesses and other 
     users engaged in interstate and foreign commerce to multiple, 
     confusing and burdensome taxation, but also to restrict the 
     growth and continued technological maturation of the Internet 
     itself;
       Whereas the complexity of the issue of domestic taxation of 
     electronic commerce is compounded when considered at the 
     global level of almost 200 separate national governments;
       Whereas the First Annual Report of the United States 
     Government Working Group on Electronic Commerce found that 
     fewer than 10 million people worldwide were using the 
     Internet in 1995, that more than 140 million people worldwide 
     were using the Internet in 1998 and that more than one 
     billion people worldwide will be using the Internet in the 
     first decade of the next Century;
       Whereas information technology industries have accounted 
     for more than one-third of real growth in United States Gross 
     Domestic Product over the past 3 years;
       Whereas information technology industries employ more than 
     seven million people in the United States, and by 2006, more 
     than one-half of the United States workforce is expected to 
     be employed in industries that are either major producers or 
     intensive users of information technology products and 
     services;
       Whereas electronic commerce among businesses worldwide is 
     expected to grow from $43 billion in 1998 to more than $1.3 
     trillion by 2003, and electronic retail sales to consumers 
     worldwide are expected to grow from $8 billion in 1998 to 
     more than $108 billion by 2003;
       Whereas the Internet Tax Freedom Act of 1998 enacted a 
     policy of technological neutrality and non-discrimination 
     toward taxation of electronic commerce, and stated that 
     United States policy should be to seek bilateral, regional 
     and multilateral agreements to remove barriers to global 
     electronic commerce;
       Whereas the World Trade Organization, at its May 1998 
     Ministerial Conference, adopted a declaration that all 132 
     member countries ``will continue their current practice of 
     not imposing customs duties on electronic transmissions'';
       Whereas the Organization for Economic Cooperation and 
     Development and industry groups issued a joint declaration at 
     its October 1998 Ministerial meeting on Global Electronic 
     Commerce supporting the principles of technological 
     neutrality and non-discrimination and opposing discriminatory 
     taxation imposed on the Internet and electronic commerce;
       Whereas the Committee on Fiscal Affairs of the Organization 
     for Economic Cooperation and Development has stated that 
     neutrality, efficiency, certainty and simplicity, 
     effectiveness and fairness, and flexibility are the broad 
     taxation principles that should be applied to electronic 
     commerce;
       Whereas the United States has issued joint statements on 
     electronic commerce with Australia, the European Union, 
     France, Ireland, Japan, and Korea providing that any taxation 
     of electronic commerce should be neutral and 
     nondiscriminatory; and
       Whereas a July 1999 United Nations Report on Human 
     Development urged world governments to impose ``bit taxes'' 
     on electronic transmissions; Now, therefore, be it
       Resolved by the Senate (the House of Representatives 
     concurring), That the Congress--
       (1) urges the President to seek a global consensus 
     supporting--
       (A) a permanent international moratorium on tariffs on 
     electronic commerce; and
       (B) an international ban on special, multiple, and 
     discriminatory taxation of electronic commerce and the 
     Internet;
       (2) urges the President to instruct the United States 
     delegation to the November 1999 World Trade Organization 
     ministerial in Seattle to seek to make permanent and binding 
     the moratorium on tariffs on electronic transmissions adopted 
     by the World Trade Organization in May 1998;
       (3) urges the President to seek adoption by the 
     Organization for Economic Cooperation and Development and 
     implementation by the group's 29 member countries of an 
     international ban on special, multiple, or discriminatory 
     taxation of electronic commerce and the Internet; and
       (4) urges the President to oppose any proposal by any 
     country, the United Nations, or any other multilateral 
     organization to establish a bit tax on electronic 
     transmissions.

 Mr. WYDEN. Mr. President, I am pleased to be joined by 
Senators Leahy and Baucus to introduce today a resolution calling for 
an international ban on tariffs and on special, multiple and 
discriminatory taxes on electronic commerce and the Internet. 
Representative Cox, with whom I have collaborated in the past on 
Internet-related matters, is introducing a companion resolution in the 
House of Representatives.
  The resolution urges the President to seek a global consensus 
supporting a permanent international moratorium on tariffs on 
electronic commerce, and an international ban on special, multiple, and 
discriminatory taxation of electronic commerce and the Internet. The 
resolution urges the President to pursue the ban on tariffs through the 
World Trade Organization--particularly at the WTO Ministerial meeting 
that will be held in Seattle this November, and to pursue the 
moratorium on discriminatory, special, and multiple taxes on global e-
commerce through the Organization for Economic Cooperation and 
Development. These positions reinforce the efforts of the U.S. Trade 
Representative at the WTO and of the U.S. negotiators at the OECD.
  In the Internet Tax Freedom Act, enacted during the last Congress, we 
challenged the concept of 30,000 U.S. tax jurisdictions swamping online 
consumers and entrepreneurs with a crazy quilt of discriminatory taxes. 
But this problem is small potatoes compared to the prospect of 
thousands of additional discriminatory tax regimes Americans might face 
in nearly 200 countries around the world.
  We are not going to sit by while the booming, global e-market becomes 
a

[[Page S11736]]

tasty feast for overly hungry tax collectors from Bonn to Beijing and 
Manila to Milan.
  The same questions we dealt with in the United States become vastly 
more complex at the international level. For example, during the course 
of the debate about the Internet Tax Freedom Act last year, I asked 
what happens when Aunt Millie in Iowa uses America Online in Virginia 
to order Harry and David's pears from Medford, Oregon, pays for them 
with a bankcard in California and ships them to her old friend in 
Florida?
  In the global arena, we have to ask what happens when a tax collector 
in Germany tries to collect a Value Added Tax on a U.S. e-entrepreneur 
from Coos Bay, Oregon with no physical presence in Europe? This is a 
very real threat because not long ago, the tax chief of a key European 
nation called trade over the Internet ``a threat to all government tax 
revenue--a very serious threat.''
  In addition, we have heard about the possibility of discriminatory 
bit taxes, which are taxes levied on the volume of e-mail that passes 
over the Net. And we have recently learned that the European Union is 
discussing something known as ``blocking and takedown.'' This is not a 
rugby term, but if established, it would allow the EU to bar the use of 
an American entrepreneur's website in Europe if he or she was unwilling 
to participate in an EU tax registration scheme.
  Moreover, some countries are blurring the line between services and 
products in an effort to impose still more special, targeted tariffs 
and taxes on global e-commerce. At present, some digital delivery--for 
example, downloading a CD or software program--is not taxed, but 
there's considerable support for turning this service into a product 
that could be the subject of discriminatory taxes.
  Developing fair ground rules for the global digital economy is not a 
job for the faint hearted. That is why strong U.S. leadership is 
imperative in key multinational groups that are beginning to consider 
how to update old laws and regulations to apply in the global 
electronic marketplace.
  That is the point of the resolution we are introducing today. Again, 
the resolution does two things: it urges the President to seek a global 
consensus supporting a global moratorium on tariffs on electronic 
commerce at the upcoming WTO ministerial meeting in Seattle, and 
second, it urges the President to seek through the OECD a global 
moratorium on discriminatory, multiple and special taxes on electronic 
commerce and the Internet.
  This resolution builds upon the good work we accomplished in the 1998 
Internet Tax Freedom Act. It is time to take the effort to stop 
discriminatory taxes on electronic commerce to the international level. 
I urge my colleagues to join us in supporting the resolution.
 Mr. LEAHY. Mr. President, I am pleased to join Senator Wyden 
in support of this resolution to urge the United States to seek a 
global consensus supporting a moratorium on tariffs and discriminatory 
taxation of electronic commerce. I thank Senator Wyden and Congressman 
Cox for their leadership in keeping the Internet free of discriminatory 
taxes in the United States and around the world.
  The Internet allows businesses to sell their goods all over the world 
in the blink of an eye. This unique power also presents a unique 
challenge. That challenge facing the United States and the world is 
developing tax policies to nurture this exciting new market. That is 
why I am pleased to cosponsor this resolution to urge the President to 
seek a global moratorium on discriminatory taxes and tariffs on 
electronic commerce.
  The growth of electronic commerce is everywhere, including my home 
state of Vermont. Today hundreds of Vermont businesses are doing 
business on the Internet, ranging from the Vermont Teddy Bear Company 
to Al's Snowmobile Parts Warehouse to Ben & Jerry's Homemade Ice Cream. 
These Vermont businesses are of all sizes and customer bases, from Main 
Street merchants to boutique entrepreneurs to a couple of ex-hippies 
who sell great ice cream. But what Vermont online sellers do have in 
common is the fact that Internet commerce lets them erase the 
geographic barriers that historically have limited our access to 
markets where our products can thrive. Cyberselling is paying off for 
Vermont and the rest of the United States.
  As electronic commerce continues to grow, the United States must take 
the lead in fostering sound international tax policies. The United 
States was the incubator of the Internet, and the world closely watches 
the Internet policies that we debate and propose. Our leadership is 
critical to the continued growth of commerce on the Internet. Our 
resolution advances the leadership role of the United States by urging 
the administration to secure a global moratorium on discriminatory e-
commerce taxes.
  With more than 190 nations around the world able to levy 
discriminatory taxes on electronic commerce, we need this resolution to 
contribute to the stability necessary for electronic commerce to 
flourish. We are not asking for a tax-free zone on the Internet; if 
sales taxes and other taxes would apply to traditional sales and 
services, then those taxes would also apply to Internet sales under our 
resolution. But our resolution would urge a global ban on any taxes 
applied only to Internet sales in a discriminatory manner. Let's not 
allow the future of electronic commerce--with its great potential to 
expand the markets of Main Street businesses--to be crushed by the 
weight of multiple international taxation.
  Today, there are more than 700,000 businesses selling their sales and 
services on the World Wide Web around the world. Estimates predict that 
the number of e-business Web sites will top 1 million by 2003. This 
explosion in Web growth has led to thousands of new and exciting 
opportunities for businesses from Main Street to Wall Street.
  The International Internet Tax Freedom Resolution will help ensure 
that these businesses and many others will continue to reap the rewards 
of electronic commerce.

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