No New Internet Taxes, For NowEditor's Note: President Bill Clinton's decision to favor a moratorium on Internet taxes puts the White House at odds with most of the nation's governors. Hence, the pr

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No New Internet Taxes, For Now

Editor's Note: President Bill Clinton's decision to favor a moratorium on Internet taxes puts the White House at odds with most of the nation's governors. Hence, the president is calling for a commission to reach a consensus on the issue for the long-term. Below is an edited version of Clinton's Feb. 26 speech to the Technology '98 conference in San Francisco.

"This is a truly exciting time to be an American. The qualities of the digital revolution, its dynamism, its curiosity, its flexibility and its drive - they're at the core of our character and the legacy of our original revolution."

-Bill Clinton

A new study, soon to be released by our working group on electronic commerce, documents the remarkable growth of the Internet. Within a single year, Amazon.com, an online bookstore, increased its sales [by] nearly 10 times, selling 6.5 million books in 1997.

In a year's time, Internet airline ticket sales nearly tripled and [are] expected to grow sixfold, to $5 billion a year, by the year 2000. By 2002, electronic commerce between businesses in the United States alone will exceed $300 billion. And of course, as with everything on the Internet, that is just the beginning.

This explosion of real commerce has the potential to increase our prosperity, to create more jobs, to improve the lives of our people and to reach into areas that have not yet felt prosperity. But it raises new and serious issues, as well.

How can we further its growth and foster its magnificent freedom without allowing it to be used as a tax haven that drains funds our states and cities need to educate our children and make our streets safe?

There are 30,000 separate taxing authorities in the United States, all struggling to come to grips with this phenomenon, with only their existing old tax methods to apply to a very new world.

There should be no special breaks for the Internet, but we can't allow unfair taxation to weigh it down and stunt the development of the most promising new economic opportunity in decades.

I think America should adopt a moratorium on discriminatory taxation so that a bipartisan commission of elected officials, business leaders, consumers and representatives of the Treasury Department can carefully study the matter and come to a resolution.

Therefore, I support the Internet Tax Freedom Act now before Congress because it takes into account the rights of consumers, the needs of businesses and the overall effect of taxation on the development of Internet commerce.

The legislation does not prevent state and local governments from applying existing tax- es to electronic commerce as long as there is no discrimination between an Internet transaction and a traditional one. It does give us time to work through what is a very, very complex issue.

I'm committed to listening to the concerns of the governors, the mayors, other officials and businesses and to achieve a consensus that will establish rules that are pro-growth, nondiscriminatory, but will provide appropriate revenues our communities need to meet vital public purposes.

I think this legislation will have the support of both parties, and I look forward to working with many of you to pass it and, along the way, to reach a greater consensus in our nation about how to go forward from here.

To ensure that electronic commerce can flourish across international borders, I've also asked the secretary of the treasury to work with our international trading partners to block new or discriminatory taxes on global electronic commerce. And we're working with the Organization of Economic Cooperation and Development to streamline tax admini- stration in cyberspace.

There are oth-er ways our nation must work to harness the potential of the Internet.

We want to work with you to meet our goal of connecting every classroom and library in America to the Inter-net by the year 2000. Just this morning, Vice President Gore announced that we have now connected nearly 80 percent of our schools to the Internet - more than twice as many as were connected in 1994, when we had the first 'Net Day here in California.

He also announced new private and nonprofit efforts to connect underserved communities to 21st- century technology, bringing us closer to ensuring that a child from the poorest inner city, the most isolated rural area or the most affluent suburbs all will have the same access to the same universe of knowledge in the same real time.

We want to make certain that cyberspace is a healthy place for our children, in a way that does not overregulate the Internet or stifle the growth of electronic commerce. We will work with you to make sure that consumer protections and laws that promote competition remain strong in the new economy, at the dawn of a new century, just as we built competition into the old economy at the turn of the last century.

We will work with you to make sure that the Internet never becomes a vehicle for tax evasion or money laundering. We will work with you to build a new Internet that operates up to a thousand times faster than it does today. My balanced budget includes $110 million to develop the next-generation Internet in partnership with leading U.S. high-tech companies and universities.

This is a truly exciting time to be an American. The qualities of the digital revolution, its dynamism, its curiosity, its flexibility and its drive - they're at the core of our character and the legacy of our original revolution. By once again adding the fuel of interest to the fire of genius, as Abraham Lincoln once said, our country is leading the world to new heights of economic and human development.

The economic development is largely the means by which we seek to expand the quality of human life, not only for the people who directly participate in it, but for those who benefit indirectly.

As I think more and more about a new century, in a new millennium, I also think more and more about how we began. All of
you are here today, committed to an incredible entrepreneurial way of life and work, as the descendants of a group of people who came here believing that free people would nearly always get it right.

If you look at the whole history of this country, that's what it's been about. You think about every single period of change and crisis, whether it was the Civil War, the Industrial Revolution, the civil rights era or the present Information Age, and the advances have come when we have deepened the meaning of freedom and expanded it to more people, widened the circle of opportunity and prosperity, and found a way across all our myriad diversities to be a stronger, more united nation.

That is really what you are a part of, to a degree that would have been unimaginable to the people who founded this nation, but I believe it would make them very, very proud.


Copyright 1998 Post-Newsweek Business Information, Inc. All rights reserved

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