WASHINGTON - In an apparent breakthrough in a battle that has pitted cities and states against the federal government on the question of Internet taxes, the two sides announced today that they had reached a compromise that might allow congressional legislation to move quickly.
Representative Christopher Cox (R-California), the sponsor of a House bill that aims to place a moratorium on new Net-specific levies, said he has reached agreement with state leaders on a revised bill that will enable the measure to clear the House before Congress adjourns for Easter.
The new pact, hammered out with the National Governors Association and groups representing mayors and local officials, reduces Cox's proposed six-year moratorium on new Net taxes to three years. The deal also will allow Net levies in force on 1 March - such as those on Internet access - to stay on the books. Cox also agreed to an expedited congressional study of the issue of how to tax e-commerce and mail-order services.
Governors and mayors have opposed the moratorium on the grounds that, with e-commerce predicted to become a more and more important force in the economy, a limit on Net taxes might jeopardize revenue streams.
Cox's hope for speedy House passage notwithstanding, the battle over the issue might still have a couple of tough rounds to go. Cox's Senate partner in pushing the moratorium idea, Oregon Democrat Ron Wyden, said today that he feels the terms of the House deal are too sweeping and that it was a mistake to mix the online tax issue with the age-old issue of ensuring states and localities get their cut of mail-order taxes.
