California governor: No Net taxes
- By IDG News Service, James Evans
- Sep 27, 2000
California Gov. Gray Davis on Monday vetoed legislation that would have
taxed Internet purchases from click-and-mortar companies.
"In order for the Internet to reach its full potential as a marketing medium
and job creator, it must be given time to mature," Davis said, adding that
the state should revisit the issue in three to five years.
Under the bill, businesses with physical operations that also operate online
would have been required to charge taxes to in-state residents for online
transactions. According to legislation, the tax would have brought in $14.1
million annually, $9.1 million in state taxes and $5.3 million in local
The legislation sought to close a loophole whereby retailers could avoid
collecting sales tax by separating online activities moving them out of
state, according to the bill's sponsor, Assemblywoman Carole Migden (D-San
Davis also signed a bill calling for a three-year moratorium on Internet
access taxes, and another bill to create a commission to examine sales-tax
issues regarding the Internet. The bill, introduced by state Sen. John Vasconcellos
(D-Santa Clara), creates the California Commission on Tax Policy in the
New Economy, which will develop a long-term strategy for Internet-related
state and local tax structures.