US summit over future of tax freedom for internet sales

The e-commerce commission has been charged with untangling the increasingly controversial issue of taxing online sales. In its final meeting today, the commission is expected to begin putting the final touches to its much-awaited proposals, expected next month.

The commission was set up following the Internet Tax Freedom Act of October 1998, which imposed a three-year moratorium on any new internet taxes. The issue has so far divided government officials and businesses with states fearing a loss in revenue and critics claiming that some e-taxes are legally unenforceable.

But these differences have also plagued the commission with local government officials, concerned at a potential loss of up to $500m a year, threatening legal action to stop the commission’s proceedings.

The business representatives, including AT&T and AOL are expected to propose a continuation of the moratorium for five years to allow states to simplify tax codes and make it easier to eventually collect some form of e taxes. The proposals could form the basis of the commission’s final report.

The European Commission, which has already published guidelines on indirect e taxes, will conduct its own study regardless of the commission’s findings. The Chancellor Gordon Brown is also expected to clarify some of the UK’s e-commerce tax policies in tomorrow’s budget.

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