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Press Release

Pro-Tax Coalition Wrong to Tax Internet

04/07/2000

Today, Citizens for a Sound Economy is opposing the pro-tax coalition of state and local representatives who have joined forces with retail giants and billionaire developers to tax the Internet. Rather than clandestine meetings and new taxing authority, CSE proposes:

Unleash the full potential of the high-tech economy for consumers by keeping the Internet free from taxation. The Internet economy accounts for nearly one-third of our nations economic growth. It is estimated that if taxes were applied to online sales, growth in the technology sector would be slowed by 24 percent. The government must be stopped from taxing to death the goose that laid the golden egg.

We should be repealing taxes on the Internet, not creating new ones. Consumers pay between 20 percent and 40 percent in taxes on communications services – tax rates similar to those on “sin” taxes. Each month consumers pay a phone tax originally enacted in 1898 to pay for the Spanish-American War. This tax costs consumers nearly $6 billion every year. These regressive taxes on Internet access are the cause of the “digital divide.” New taxes will only widen that divide.

We can give consumers the full benefits of high technology without harming Main Street or state governments. State revenues have doubled in the past 10 years because of the growth of the Internet economy. Internet sales are not a direct threat to traditional brick-and-mortar businesses. During the 1999 holiday season, 86 percent of Americans visited a retail mall to make a purchase, 42 percent used a catalog, and only 10 percent went online to shop for gifts. Americans spend billions of dollars and hours at malls and shops each year.

CSE has launched an online petition campaign to permanently ban taxation of the Internet. This campaign will send a strong message to elected officials throughout the country that the American people want the Internet free from taxation. Visit www.cse.org/petition/index.html and sign our No Internet Tax petition today!