Bill Would Preempt Multiple Net Taxes

New legislation takes aim at duplicative taxation in digital commerce

Let the online goods
flow freely, or at least more freely, was the message from the Hill Thursday.

Reps. Rick Boucher
(D-Va.) and Lamar Smith (R-Tex.) have introduced a bill that prohibits state
and local duplicative taxation of Internet transactions. Boucher is chair of the House
Communications Subcommittee, while Smith is the ranking member of the Judiciary

consumers and businesses engaged in digital commerce may be subject to
multiple, confusing and burdensome taxation because of inconsistent rules
across the thousands of state and local jurisdictions," they said in
announcing the bill.

The legislation says
that taxes may only be imposed on the retail sale of digital goods and
services, not on successive stages of the transaction, and that the tax can
only be levied by the jurisdiction where the customer's tax address is located.

It would also prevent
states from imposing personal property taxes on digital goods and services.

And in the spirit of
broadband deployment, it exempts online health, energy management and educational
services from all state and local taxes.

The National Cable &
Telecommunications Association, whose members include some of the nation's
largest ISPs, supports the bill.