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The U.S. House of Representatives passed May 10 an extension of the existing Internet tax moratorium, 352-75 in an expedited and heated session. Under H.R. 3709, the moratorium on access and discriminatory Internet taxes, which is scheduled to expire in October 2001, would continue until October 2006. The legislation also rescinds the grandfathering of state Internet taxes that were in place when the original moratorium was passed. The lopsided vote does not reflect the sometimes heated tone of the proceedings, which included the defeat of two amendments and of a motion to recommit the bill to the Judiciary committee. Rep. John Kasich (R-Ohio) set the tone for the full House vote when he said, with broad gestures and a firm, insistent voice, that the debate over whether or not to tax the Internet “missed the point.” He compared the claims by states that they are being deprived of revenue by the Internet tax moratorium to the monetary concerns of the Pharisees in the Bible. “Everyone is better off because of the growth of productivity.” Kasich said. “The single largest contributor to our economic prosperity has been the growth of information technology.” “Why would we tax something, why would we try to abuse something, why would we try to limit something that generates unprecedented growth, wealth, opportunity, and unprecedented individual power?” Kasich asked. He added, “If you tax something, you get less of it.” In contrast to Kasich’s Biblical reference, Rep Christopher Cox (R-Calif.), the bill’s sponsor, found a more contemporary allusion. He said that the five-hour debate that addressed, among other things, sales taxes on the Internet — which H.R. 3709 does not cover — was holding his bill hostage and reminded him of a past cover of National Lampoon Magazine that showed a gun being pointed at a dog with the caption, “Buy this magazine or we’ll shoot this dog.” RUSH TO PASS The proposed legislation was passed three weeks after the Advisory Commission on Electronic Commerce delivered its report to Congress and closely mirrors the report’s recommendations. The momentum to pass the bill began on May 4 when the House Judiciary Committee, unexpectedly and with almost no debate, approved H.R. 3709 by a 28-9. The Cox bill had originally called for a permanent extension of the Internet tax moratorium. A substitute amendment by Va. Reps. Robert Goodlatte (R) and Robert Boucher (D) was seen as a compromise approach. The permanent ban amendment failed 10-23 and a two-year extension proposed by Rep. William Delahunt (D-Mass.) was defeated 15-22. Delahunt said afterward that the committee’s approval of the five-year extension was “reckless.” The committee’s top ranking Democrat, Rep. John Conyers (Mich.) complained about the rush to pass but supported extending the moratorium because it would give Congress some “additional breathing room and allow the states greater opportunity to simplify their own tax structure.” Both Delahunt and Rep. Steve Chabot (R-Ohio) offered amendments to the bill on the House floor — Chabot to make the moratorium permanent, Delahunt to, again, limit the extension to two years. Both amendments were defeated. Conyers then proposed that the bill be recommitted to the Judicial Committee as a two-year extension but with the grandfathering in place. But Conyers’ motion to recommit was defeated 177-250. Although GOP leaders had originally talked of delaying debate on the moratorium until next year, House Majority Leader Dick Armey (R-Tex.), in what opponents called a blatantly election-year move, rallied his troops in the apparent hope of winning the gratitude of taxpayers and the increasingly powerful high-tech industry. Others saw the accelerated speed in which the bill was marked up, passed by the committee, and brought to the House floor as being due to House Speaker Dennis Hassert’s (R-Ill.) eagerness to back up his campaign to show that Republicans are stronger on tax issues than Democrats. “Keeping the Internet free from new, discriminatory, and access taxes benefits consumers, businesses, and state and local governments,” Goodlatte said. “The growth and potential of the Internet and electronic commerce is boundless and should not be inhibited. It is encouraging to see the House Judiciary Committee take swift action on this important legislation.” H.R. 3079 is seen as similar to the Senate bill sponsored by Sen. Ron Wyden (D-Ore.). Predictions are that the House will pass the bill and, while the legislation faces more opposition in the Senate and lack of White House support, the political momentum of a strong House approval could improve prospects there. Rep. Jerrold Nadler (D-N.Y.) predicted that if the bill passes in the Senate, President Clinton will sign it. Others say its fate is less certain.

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