It was only a small step, it didn’t even deal with sales taxes, and there are still several stages the legislation must move through, but the vote in August by the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law to extend the moratorium on Internet taxes-known as the Internet Tax Freedom Act-sparked immediate and opposite responses from two associations representing merchants.
“If ITFA is reauthorized without addressing the sales tax issue, this issue may never be addressed and Internet and mail-order sellers will continue to have a government-sanctioned price advantage over Main Street retailers for years to come,” National Retail Federation Vice President for Government and Industry Affairs Scott Cahill said. “That is unfair not just for local retailers but the state and local governments that count on them for tax revenue. In an industry with profit margins as narrow as they are in retail, the lack of sales tax is a significant price advantage.”
“The moratorium’s extension will allow small business to develop and stretch their wings on the Internet,” said H. Robert Wientzen, president and CEO of The Direct Marketing Association. “The extension will ensure that e-commerce can continue to compete and will go a long way to bridging the digital divide.”
Although some states are cooperating in a streamlined sales tax project, the sales tax issue has come up repeatedly during Congressional debates. The House Judiciary Committee, then the House and the Senate, then the president must approve the bill before it becomes law. Congress took its summer recess soon after the vote and the soonest the issue could come before the full Judiciary Committee would be after Labor Day.