(Washington, D.C.)  In preparation for today’s vote on internet taxation, the Council for Citizens Against Government Waste (CCAGW) wrote a letter urging the Senate to reject an amendment being offered by Sen. Lamar Alexander (R-Tenn.) to S. 150, the Internet Tax Non-discrimination Act of 2003.  Sen. Alexander’s amendment would require the Secretary of the Treasury to make payments to the states on revenue “not received” as a result of the Internet Tax Freedom Act enacted in 1998.  Excerpts from the letter, signed by CCAGW President Tom Schatz, follow:

The Internet Tax Freedom Act (ITFA) created a temporary moratorium on state and local taxation of online services and electronic commerce, including taxes on Internet access, taxation by multiple states on products purchased over the Internet, and taxes that treat Internet purchases differently than other types of commercial sales.  The IFTA has prevented states and localities from imposing a range of duplicative and discriminatory taxes on electronic commerce.  Such taxation would have created unfair burdens on the IT industry, and discouraged many Americans from using the Internet for any purpose, especially the purchase of goods and services. 

Sen. Alexander’s amendment would do an end-run around state taxpayers and sock it to federal taxpayers by requiring the U.S. Treasury to send back to state coffers the taxes states and localities were prohibited from imposing under the Internet Tax Freedom Act.  Indeed, this amendment is proof of why passage of S. 150, which would permanently extend the tax moratorium, is so important.  The bottom line is not “state’s rights” – it is about money, plain and simple, and state and local governments want more of it.  Rather than cutting wasteful spending to reduce deficits, states are raising taxes and turning to the federal government for handouts.  This amendment sets a terrible precedent and must be defeated.

We urge you to vote “No” on Sen. Alexander’s amendment and vote “Yes” on S. 150.  A permanent extension of the moratorium will keep the playing field level for online merchants and keep costs down for consumers by ensuring that Americans will continue to have fair and reasonable access to the Internet.  CCAGW will consider the vote on Sen. Alexander’s amendment and on final passage of S. 150 in its 2003 annual ratings.

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.