[Congressional Record Volume 147, Number 135 (Wednesday, October 10, 2001)]
[Senate]
[Pages S10459-S10460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALLEN (for himself, Mrs. Boxer, Mr. Burns, Mr. Gregg, and 
        Mr. Warner):
  S. 1525. A bill to extend the moratorium on the imposition of taxes 
on the Internet for an additional 5 years; to the Committee on 
Commerce, Science, and Transportation.
  Mr. ALLEN. Mr. President, I rise today to introduce the Defense of 
Internet Tax Freedom Act, with my friends and colleagues from 
California, Montana, New Hampshire, and Virginia, to extend the 
moratorium on Internet access taxes and multiple and discriminatory 
taxes for five-years. As you know, the original provisions of the 
Internet Tax Freedom Act are set to expire this October 21, less than 
two weeks from now.
  As many in this chamber know, I have made extending the moratorium on 
taxes that discriminate against the Internet one of my top priorities 
since coming to the Senate. I cannot ever envision a time when it will 
be okay for any government to tax freedom on the Internet by taxing 
access to the Internet. I cannot ever conceive of any instance or event 
that will precipitate justification for multiple or discriminatory 
taxes on the Internet by any government, large or small, national or 
local.
  For this reason, I have maintained constant and steady support for 
the permanent extension of the Internet moratorium on Internet access, 
multiple and discriminatory taxes. I never thought I would be willing 
to vote for, much less sponsor, legislation that endorsed a limited 
extension, but the events of September 11, 2001 have forced all of us 
in this Congress, and indeed throughout the country, to think and act 
according to the most immediate interests of our Nation.
  Now, more than ever, the people of this country need security, not 
only with regard to safety, but also with regard to their financial 
future. Any additional tax burdens on the Internet now, will mean 
additional costs that many Americans cannot afford, forcing the poorest 
in our society to reduce or even forgo their use of the Internet as a 
tool for education and exploration.
  Consider the fact that by taxing Internet access, States and 
localities are actually contributing to an already growing economic 
``digital divide.'' For every dollar added to the cost of Internet 
access, we can expect to see lost utilization of the Internet by 
thousands of poor and impoverished families nationwide.
  Furthermore, the more expensive you make Internet access, the less 
likely people are to buy advanced services, including broadband 
delivered high-speed Internet access, multimedia expansion cards, and 
Internet protocol enabling software. Given the current state of the 
technology market as a whole, a decrease in consumption resulting from 
Internet access taxes could destroy what glimmer of hope remains for 
many telecommunications and technology manufacturers.
  The effects of these closures have already been felt throughout our 
country. Congress should be working to keep businesses open and 
Americans employed, and that is why we must pass a reasonable extension 
of the moratorium on Internet access, multiple, and discriminatory 
taxes.
  If you consider for a moment that the Internet has only been around 
in its contemporary form since 1995 or 1996, then you realize that this 
technology and the impact it has made and will continue to make on our 
economy is both very promising and very unsure. To date we have very 
little reliable data as to the real impact the

[[Page S10460]]

Internet is making on the daily lives of Americans.
  We have little to no information as to how and why consumers on the 
web decide to spend their hard earned money. We have no real evidence 
that consumers would decide to spend money or purchase products they 
buy on the web today if these products were only available in 
traditional brick-n-mortar settings.
  The studies we have seen thus far all contradict one another. In one 
study dealing with the effects of Internet purchasing on State 
revenues, I found a quote from the President of the National Conference 
of State Legislatures comparing State budgets in recent years to the 
engine of a luxury car. Yet, I have heard from this and other 
organizations that the Internet is destroying State tax revenue 
streams.
  I don't know who or what to believe. All I know is that many in this 
Senate need time to understand this issue. There are many members in 
this body who do not fully recognize that the moratorium is completely 
unrelated to sales taxes or the collection thereof. Given that fact, I 
cannot see why extending the moratorium for a mere few months or years 
would be beneficial in terms of educating the general public and the 
Members of this body.
  In a matter of months or a few years, the technology sector will only 
just be at the point of full recovery from the current downturn in our 
economy. We will need several years beyond that point of full recovery 
to complete the comprehensive, neutral studies of the Internet and e-
commerce that Members of Congress will need in order to make these 
important decisions, decisions that may directly challenge the 
conventional wisdom of our Founding Fathers and our own historical 
experience.
  Given these requirements, five years seems to be the minimum amount 
of time Congress, the private sector, and other interested 
organizations will need in order to make well-informed, proactive 
decisions regarding other issues not related to the Internet 
moratorium.
  In the meantime, we can guarantee a level of stability for the 
Internet over the next five years that will allow our Nation to 
continue to close the digital divide and encourage new and enhanced 
uses of the web for consumers.
  I call on my colleagues to join me and my fellow cosponsors in 
cosponsoring the Defense of Internet Tax Freedom Act, in supporting a 
five year extension of the Internet moratorium on access multiple and 
discriminatory taxes.
  Let's give the Internet the future it deserves and show America that 
the answer is not more taxes but rather better, more efficient 
government for the people and by the people.
  Mrs. BOXER. Today, I am joining Senators Allen, Burns, and Gregg in 
supporting an extension of the Internet tax moratorium for another 5 
years.
  I supported the moratorium when it was initially instituted in order 
to encourage the growth of the then newly emerging Internet industry. 
In the 1990s, the industry enjoyed a growth spurt that helped move the 
whole economy forward. But recently, Internet companies have fallen on 
hard times.
  Because Internet commerce and technology firms are not now fairing 
well, I support a five year extension of the tax moratorium. I believe 
that renewed investment in the Internet is crucial to the welfare of 
the entire economy and we need to support its growth as much now as we 
did in 1998. Through a clean extension of the tax moratorium, Congress 
can promote an environment for Internet growth that avoids the 
uncertainty, inefficiencies, and barriers to entry that new taxes would 
create.
  The technology sector was in a recession before the September 11, 
2001 attacks. In the first half of 2001, more than 300,000 technology 
sector jobs were eliminated and companies declared bankruptcy because 
of reduced consumer and business spending on technology products. One 
example, Webvan, an Internet grocery delivery company, closed shop in 
July. In the process, 2,000 employees lost their jobs in the company's 
seven markets--San Francisco, Los Angeles, Orange County, San Diego, 
Seattle, Chicago, and Portland.
  With the additional decline in consumer confidence resulting from the 
September 11, 2001 terrorist attacks, the industry has fallen even 
deeper into recession. The results have been devastating for many 
firms. For example, since the attacks, Cisco laid off 8,500 workers, 
Excite@home has laid off 500 workers, and MicroStrategy has laid off 
200 workers. By extending the Internet tax moratorium for five years, 
we send the message to the industry and its workers that we will not 
turn a deaf ear to this crisis.
  The economy rose during the last eight years on the new jobs, 
efficiencies, and demand for products that the Internet and Internet-
related companies created. Restoring economic growth will depend 
largely on our ability to spark renewed investment and growth in this 
vital industry. Firms that sell products over the Internet are key 
consumers of computers, software, and hardware. Their growth would 
encourage additional interest in connecting to the Internet and help 
produce new consumer demand for more technology products.
  We should assist, not burden our technology firms at this time. 
Another five years could give the Internet time to work out its current 
growing pains. As technology innovations encourage additional growth 
and renewed interest in the Internet, our economy as a whole will 
benefit. A stronger Internet will mean more jobs, more companies, and a 
broader tax base. That is a net gain for everyone.
                                 ______