An electronic commerce committee formed by California Governor Pete Wilson is set to recommend on a new set of Internet-friendly tax initiatives Monday, including a permanent ban on new taxes on online transactions and some cuts in existing taxes, sources say.
The proposals are likely to intensify the nationwide debate over the role state and federal governments play in promoting businesses on the Internet vs. preserving those on Main Street.
Although the recommendations relate mainly to California state tax policies, they could have a nationwide impact since the state is home to so many big Internet companies.
Earlier this year, California passed a three-year moratorium on Internet taxes, but the measure was presented as an interim plan way to support the electronic commerce industry in its infancy. A permanent ban would be far more controversial, since it would eventually apply to businesses that are established and even flourishing.
Along with the ban on new taxes, the committee will recommend tax reductions on certain goods that can be purchased and delivered electronically. A draft of the proposal suggests that "electronic delivery of software, music and other similar goods" be given the highest priority for tax cuts.
The proposal also includes suggestions for simplifying tax issues in intrastate e-commerce transactions.
The e-commerce committee, formed last spring, consists of many of the most powerful players in the fast-growing e-commerce industry including, George Bell, president of the Internet portal Excite, Roberta Katz, senior vice president of Netscape Communications, and John Place, general counsel for Yahoo.
While Governor Wilson has not officially backed all of their specific recommendations, he has repeatedly spoken of the need for policies that would not inhibit a fledgling industry that has enormous potential. The Internet is already one of the most successful industries in California, generating thousands of jobs and a general affluence in many areas around Silicon Valley.
Wilson, who leaves office early next year, will pass on the recommendations to his successor, Gray Davis.
Copyright© 1998 Reuters Limited.
