FROM THE OFFICE OF PUBLIC AFFAIRS

INTERNET POLICY MAKING

The three Federal government representatives on the Advisory Commission on Electronic Commerce (ACEC) today urged all stakeholders to continue to work in good faith to achieve a balanced consensus on the difficult issues associated with the taxation of electronic commerce. They released a statement to be attached to the Commission's final report setting forth in detail the Administration's position.

The Administration supports a permanent ban on taxes on Internet access; a permanent ban on customs duties on electronic transmissions; a continuation of the moratorium on multiple and discriminatory taxes; international tax rules that are neutral, nondiscriminatory, simple and certain; and simplification of state and local sales taxes and telecommunications taxes.

Congress passed the Internet Tax Freedom Act, which created the ACEC, specifically requiring a two-thirds supermajority vote to include any findings or recommendations in the final report. When it became clear that a two-thirds supermajority would not be obtained, the Commission became subject to procedural maneuvering to ensure that the only comprehensive proposal included in the final report was the one supported by Chairman Gilmore and his coalition. As a result the Federal Representatives had no choice, but to vote against the final report, because it did not comply with the rules established by Congress.

"This flawed process led to a report that includes a proposal that is strongly opposed by the vast majority of Republican and Democratic Governors, virtually all other state and local government officials, and large segments of the business community" said the three Federal Representatives on the Commission. "The report is unfair in its presentation of the results."

The Administration officials worked throughout the process, striving to achieve a balance between the interests of technology, the needs of state and local governments, and the continued viability of traditional retailers, large and small. The Administration pledged to continue to participate in constructive discussion of these issues in the future with state and local officials, representatives from all sectors of the business community, members of Congress, and anyone who in good faith seeks to find solutions to these important and complex issues.

The three Federal Representatives serving on the Commission are Joseph Guttentag, Senior Advisor, U.S. Department of the Treasury, Andrew Pincus, General Counsel, U.S. Department of Commerce, and Robert Novick, General Counsel, Office of the United States Trade Representative.