December 26, 2000, 9:55 AM

Suddenly, everybody`s an expert on e-taxes

Don Davis

Editor in Chief

What the federal Advisory Commission on Electronic Commerce lacks in consensus on taxing Internet purchases it makes up in proposals on the issue. The group, scheduled to meet this month in Dallas, will hear at least three more plans-formally or otherwise.

They include a proposal by House Policy Chairman Christopher Cox (R-Calif.) and U.S. Sen. Ron Wyden (D-Ore.) to permanently bar Internet taxes when the current moratorium expires in 2001. Presidential candidates also continue to weigh in: Sen. John McCain (R-Ariz.) says he’ll ban taxes on all Internet transactions if elected. On the industry side, a coalition made up of America Online, Charles Schwab Corp., AT&T and other companies has proposed exempting music, books and other information products.

The cacophony of opinion is unlikely to move the commission one way or the other. “We’re talking about collecting taxes, and this being an election year, it’s difficult to compromise,” says Richard Prem, partner with the e-commerce tax area at Deloitte & Touche, New York.

Prem fears that people making the proposals lack the proper information. He recommends an academic study on the effects and implications of Internet taxes. “No one knows where the technology is going,” he adds. “No one knows what huge the volume of Internet business will be. In a lot of these proposals, if you peel back the layers, people don’t have the full revenue picture.”

Simply extending the current moratorium is one option, of course. But it already is leaving important questions unanswered, says Prem, such as what businesses that collect sales tax do with the money. “We need to get some black-and-white rules.”


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