Advisory Commission on Electronic Commerce Gets Under Way

WILLIAMSBURG, Va. -- Virginia Gov. James Gilmore was officially elected as chairman of the Federal Advisory Commission on Electronic Commerce, a 19-member congressional advisory panel that began meeting here Monday to determine how or whether to tax Internet-based electronic commerce.

During a two-hour meeting, the group debated administrative issues including budget, subcommittee assignments and the official appointment of an executive director. The panel, which will spend all day today with presentations and debate, is scheduled to meet three more times over the coming year and is expected to issue its final report to Congress by April 2000.

"I am confident that the commission will make even, balanced recommendations that will positively impact the future of electronic commerce and the Internet," Gilmore told the panel members, who include business leaders, federal, state and local government officials and members of not-for-profit associations.

"This commission will produce what is arguably the most important policy initiative of the Information Age. Our recommendations on the critical issues of electronic commerce and tax policy will have global implications."

The meeting began even as Ernst&Young released a study that found that the increasing popularity of buying goods and services over the Internet had minimal effect on the collection of sales and use taxes in 1998.

Conducted by Ernst&Young's Economic Consulting and Quantitative Analysis Group, the study estimated that sales and use taxes that were not collected from Internet sales totaled less than $170 million, a figure that is less than one-tenth of 1 percent of total state and local government sales and use tax collections.

The commission was created last year as part of the Internet Tax Freedom Act, which placed a three-year moratorium on the taxation of electronic commerce. Gilmore and colleagues hope to come up with a solution that will balance the revenue needs of state and local governments without impeding U.S. companies in their ability to compete in a global marketplace.

Today's meeting seeks to sort out the complicated issues involved in taxing Internet sales while taking into consideration the concerns of those with a stake in electronic commerce. Among those scheduled to make presentations are Andrew Pincus, general counsel for the U.S. Department of Commerce; Joseph Guttentag, senior adviser for tax policy at the U.S. Department of Treasury; and Orson Swindle, commissioner of the Federal Trade Commission. Academics and other third-party experts will discuss sales and use taxes in the United States and their impact on state and local government operation and the long-term health of Internet-based commerce.

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