LEGISLATIVE ROUNDUP: Internet bills mount

And USPS rate case could revive interest in postal reform bill

Consumer privacy, particularly as it relates to the Internet, is among the more heated issues brewing on Capitol Hill these days.

In February, for instance, Sen. Robert Torricelli (D-NJ) introduced S. 6513, which would prohibit Internet marketers from collecting personally identifiable information – unless Web surfers have specifically agreed to allow their information to be shared. In essence, the bill would require companies to get permission from Web users before activating cookies (the digital tags that track a computer user’s activity on the Web). S. 6513 follows earlier Web-specific bills, such as the Inbox Privacy Act of 1999 (S. 759) and the Internet Freedom Act (H.R. 1686), both of which are antispam bills.

The Direct Marketing Association doesn’t expect much movement on these bills within the next few months, says Jerry Cerasale, the DMA’s senior vice president of government affairs. Nonetheless, he adds, catalogers should actively oppose any opt-in bills because they would impede their data-collection and marketing efforts.

Awaiting tax recommendations

Among other legislative activity, the Internet Tax Elimination Act (H.R. 3252; S. 1611), sponsored by Rep. John Kasich (R-OH) and Sen. John McCain (R-AZ), seeks to extend the current moratorium on collecting taxes on goods sold over the Web. The bill probably won’t be voted upon until after April. That’s when the 19-member Advisory Commission on Electronic Commerce (ACEC) – organized in 1998 by Congress as part of the bill that placed the existing moratorium on new Internet taxes until 2001 – is set to issue its recommendations to Congress.

“But it will be hard for the commission to come up with broad-range recommendations,” notes Richard Barton, the DMA’s senior vice president, congressional affairs, “because the group is all over the lot with different interests.”

At press time, the ACEC was considering several proposals. Virginia governor and commission chairman James Gilmore advocates a permanent tax ban on remote online sales. But at least two of Gilmore’s fellow ACEC members – Dallas mayor Ron Kirk and Utah governor Michael Leavitt – oppose the ban, fearing that e-commerce sales will overtake taxable sales from brick-and-mortar retailers, resulting in a decline of revenue for state and local governments.

With ACEC members likely to remain in disagreement on Web taxes, some sources feel that the committee will recommend to Congress a compromise proposal that seeks some sort of simplified tax structure for ‘Net product sales.

Beyond the Web

Looking beyond the Internet, the Postal Modernization Act (H.R. 22), a four-year-old bill that Congress left on the table before adjourning last year, could attract greater support from mailers preparing for the postage increase slated for early next year.

Introduced in June 1996 by Rep. John McHugh (R-NY), H.R. 22 is designed to reorganize the U.S. Postal Service, forcing it to keep rates in line with inflation and giving it greater freedom to compete with private-sector companies. The bill has had difficulty gaining support in Congress, largely because the Postal Service has been profitable for several years now. In other words, if the USPS ain’t broke, don’t fix it.

But in light of the current postal rate case, in which some catalog rates could jump more than 15%, mailers are protesting that the USPS is in need of fixing. “It’s going to take a significant effort by the DMA and others to work with McHugh to get H.R. 22 through committee,” Barton says. “But the rate case itself is proof that the Postal Service must be reformed.”

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