Tech heavyweights back Net taxes

"The hallmark of the system should be simplicity, efficiency, and fairness," according to a plan offered by America Online, Charles Schwab, MCI WorldCom, AT&T, Time Warner, and Gateway. The proposal is an effort to close the divide on the 19-member Advisory Commission on Electronic Commerce, according to commission members familiar with the effort.

The five-page proposal seeks simplification of state and local tax systems, while calling for "equal obligations and costs" on all sellers.

"We believe the system should not be more burdensome on a business that collects and remits taxes to several taxing jurisdictions than it is to a business that collects and remits taxes in a single taxing jurisdiction," the proposal says. "By eliminating any disparate burden on interstate commerce, states will have a pathway toward a system that extends their collection of existing state taxes to remote sellers."

States are now prevented by US Supreme Court rulings from forcing a company to collect sales taxes if that business doesn't have a physical presence in that state. But the court left open the possibility of changing that requirement if it meant tax collection would be less burdensome.

The proposal also calls for a permanent ban on any tax on Internet access -- something opponents have likened to charging admission to a shopping mall.

It seeks elimination of the 3 per cent federal excise tax on telecommunications. The proposal also asks Congress to extend the present moratorium on new and discriminatory taxes on electronic commerce by five years, while barring taxation of goods that could be downloaded when sold -- such as music or books -- regardless of whether the products are delivered electronically or physically shipped.

States and local governments would have until October 2004 to develop uniform tax rules and audit and filing procedures.

The proposal would also reshape physical-presence rules, which are now used to determine whether a business has a tax obligation in a specific state or city.

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