The House of Representatives approved a bill to extend for five more years the existing moratorium on new Internet taxes. The House approved the Internet tax moratorium bill by a vote of 352-75. A substitute, which would have shortened the extension to two years, was narrowly defeated. The moratorium bill, which was sent to the House floor without a single hearing, would extend for five years a current ban on Internet-specific taxes that expires in October 2001.
Sponsors say the bill is designed to prevent states from taxing access to the Internet.
However, at the same time, the bill continues the existing non-collection of the sales taxes that are due on Internet and other remote purchases. Although such taxes are already owed on Internet purchases, there is little effort made to collect them. As a result, state and local governments are losing billions in lost sales tax revenue and, if continued, will threaten education, public safety and other services that heavily depend on these revenues. The White House issued a statement opposing the five-year extension, saying it would ''in effect, enact a hold on any further consideration of Internet tax issues, creating uncertainty in a vital and rapidly growing industry.'' The bill now moves to the Senate for further consideration. At a White House Rose Garden ceremony, President Clinton was joined by the Democratic leaders of the House and Senate to unveil the Democratic proposal for a Medicare prescription drug benefit.