Web bureacracy: Little accomplished at Internet tax commission’s first meeting

Little accomplished at Internet tax commission’s first meeting

The Advisory Commission on Electronic Commerce (ACEC), the 19-member panel appointed by Congress to investigate Internet taxation policies, is due to make its recommendations to Congress in April 2000. Yet when the panel met for the first time on June 21, it did little more than elect Virginia governor Jim Gilmore as chairman, and Virginia-based public relations executive Helen Rosenker as executive director.

The ACEC was created as part of last year’s Internet Tax freedom Act, which calls for a three-year moratorium on new e-commerce taxes. The commission is made up of eight business representatives, eight state and local government representatives, and three government appointees.

While the panelists agree that the taxation issue must be resolved, they have yet to formulate whom to tax and how. Business reps, for instance, oppose any tax that singles out the Internet, such as a levy on access. “It’s clear that the commission has a lot more work to do,” says Robin Lebo, director of customer acquisition at electronics catalog Crutchfield. While not a member of the commission, she is actively following the Internet taxation issue.

“It’s not a yes-or-no question anymore,” Lebo says. “It’s a question of what. What is simple? What is fair? And will the recommendations overrule or undermine the nexus issues addressed in the Quill v. North Dakota decision?” (This Supreme Court decision stipulated that catalogers were required to collect taxes on out-of-state mail order purchases only if the cataloger had nexus, or a physical presence, in that state.)

The main issue at ACEC’s inaugural meeting was funding. Congress did not establish a budget, forcing the commission to rely on in-kind contributions, loans, and donations. ACEC plans to ask Congress for a $1.7 million budget. For now, Virginia has donated $150,000 and other in-kind contributions, such as legal counsel, and members agreed that five of the panel’s major business interests will contribute $50,000 temporarily.

“Have you ever heard of a Congressionally appointed commission with no money allocated to future meetings?” asks Ben Isaacson, acting executive director for the Association of Interactive Media (AIM). “It poses a serious question about the intent of Congress and others to get this issue resolved.” AIM, the interactive arm of the Direct Marketing Association, is represented on the ACEC panel by consultant Stan Sokul.

AIM’s Online Shopping Council plans to present a document expressing the opinion of consumers and direct marketers on the taxation issue at the ACEC’s second meeting, slated for mid-September in New York.

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