Extend the Tax-Free Web

Not surprisingly, some deadlines and important dates have slipped by in Washington's rush to respond to ever-changing antiterrorism demands. One of those missed dates, Oct. 21, was Congress's deadline for renewing the moratorium on Internet taxes.

Specifically, the ban was on any state or local levy for consumers accessing the Net - similar to fees charged consumers for access to telephone service.

Back in 1998, when the moratorium was enacted, proponents argued that the new medium needed a chance to grow free of dampening taxation. Though Internet use has grown significantly since then, that reasoning still makes sense. The House, to its credit, got around to voting an extension of the moratorium before the expiration date. The Senate didn't - though it can correct that.

The complicating factor is whether Congress should not only continue the moratorium on access taxes, but also weigh in on the much more sensitive issue of allowing states to impose sales taxes on online purchases.

At a time of declining state revenues, pressures to include Net sales are mounting. Local bricks-and-mortar merchants say it's unfair that long-distance sellers don't have to collect taxes and remit them to states and cities.

But the United States includes more than 7,500 sales-tax jurisdictions. The complexities of sorting out that many taxation formulas is daunting to companies trying to operate across state lines. The US Supreme Court, in 1992, ruled that this complexity impeded interstate commerce and needed to be resolved.

Some states have addressed that challenge, simplifying their sales-tax codes. More need to follow suit.

Meanwhile, Congress is well advised to avoid stepping into that controversy, and to simply maintain for awhile longer a no-taxes environment online.

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