CAPITAL ROUNDUP

by Kerry Gildea

President Clinton June 30 signed the Electronic Signatures in Global and National Commerce Act, which passed the House and Senate last month.

The bill, applauded throughout the high-tech industry, is expected to strengthen e-commerce by giving an electronic signature signed on the Internet the same legal validity as a traditional signature on paper.

"This legislation will benefit everyone, particularly with the inclusion of consumer protection," said Edward Black, president and chief executive officer of the Computer & Communications Industry Association, in a June 30 statement. "Consumers and businesses [can] complete complex legal transactions over the Internet, expanding opportunities for e-commerce while protecting the rights of private citizens."

Among other things, the law, which takes effect Oct. 1, will allow consumers to sign mortgage agreements, open brokerage accounts and buy insurance online without first signing a piece of paper.Government agencies increasingly are launching new consumer services of various types on the Internet that are in direct competition with and threaten the private sector, particularly in the area of electronic financial services, according to members of the IT industry.

"The role of the U.S. government as a competitive offerer of such services in the commercial marketplace raises many profound public-policy questions, not the least of which is privacy," said the presidents of three high-tech associations in a June 26 letter to House Majority Leader Dick Armey, R-Texas, and other House members.

The letter was signed by Black; William Archey, president and CEO of the American Electronics Association; and Ken Wasch, president of the Software and Information Industry Association.

While the IT officials noted Congress is starting inquiries into the issue, they recommend specific areas be investigated. For example, they advise an investigation into the Internal Revenue Service's drive to offer electronic financial services to compete directly with commercial services.

Consumers and taxpayers "would suffer from the end of private-sector innovation and market competition in electronic tax services, replaced by the 'government knows best' mandates and government-sponsored services," the letter said.Various bills that deal with states' wherewithal to tax electronic commerce purchases were the target of a June 29 hearing held by the House Judiciary subcommittee on commercial and administrative law.

Subcommittee Chairman Rep. George Gekas, R-Pa., said he initiated the hearing to bring some measure of uniformity and predictability to myriad proposals regarding state and local taxes on e-commerce.

Among the bills taken up by the panel were the Internet Tax Reform and Reduction Act of 2000 (H.R. 4267), which would impose a permanent moratorium on taxing Internet access by states and localities, and the Internet Tax Simplification Act of 2000 (H.R. 4460), which imposes a five-year moratorium on sales of digitized goods.

Given the small amount of time left in the 106th Congress, officials said it is unlikely any consensus or law will pass on either issue before year's end. But the debate over Internet taxation is expected to continue into the next Congress in 2001.

Testifying at the hearing, California state senator Ray Haynes said states need guidance on the tax issue, and that it is "unrealistic to expect that states can get together and settle this matter on their own."