Tax moratium expires, though likely to be revived


October 14, 2001


A federal moratorium on Internet-related taxes expired today, despite the efforts in Congress to extend it.

The ban, which was approved in 1998, prevents state and local governments from imposing new taxes on Internet service providers and electronic commerce sites.

The U.S. House of Representatives had approved an extension of the ban recently, but the Senate has not approved either of two versions of bills introduced earlier this month. The recent anthrax scare shut down congressional activity for several days on Capitol Hill.

The ban does not affect sales tax on e-commerce Web sites.

Consumers who buy items online are supposed to pay taxes to their own state, even if the Web site from which they purchased goods didn't charge them. However, few states have tried to collect sales taxes on these sorts of purchases, or force consumers to pay up.

Many state officials believe they are losing considerable sales tax revenue because e-commerce Web sites are only required to collect sales tax on sales in states where they have a physical presence.

E-commerce proponents say with hundreds of taxing districts to consider, the burden to charge the proper amount sales tax on all sales -- and determining where to send those taxes -- would be too high, and might slow the growth of sales on the Internet.

Some tax proponents have suggested streamlining sales tax collections for online sales, which would reduce the burden on those who must collect it.

Sales tax means a lot to some states, like North Dakota, because the state has no income tax, and depends largely on sales tax to help fund state coffers.

The Senate is likely to extend the moratorium in coming weeks. The debate on sales tax will continue, though online sales still remain only a fraction of most offline sales.

HIGH ANXIETY. Americans' concerns and questions about anthrax have sent traffic numbers at government Web sites skyrocketing.

The Center for Disease Control and Prevention site saw traffic jump by 118 percent a couple weeks ago, with more than half a million unique visitors.

Nearly 60 percent of visitors were looking for information on the symptoms, diagnosis and treatment of anthrax infections.

The posing of 22 Most Wanted Terrorists sent traffic to The Federal Bureau of Investigations' Web site up by 518 percent, with more than 900,000 unique visitors.

Sixty-seven percent of the site's visitors visited Web pages related to the 22 terrorist. Twenty-five percent sought information on Osama Bin Laden.

To check out the CDC and FBI sites, visit and

BROADBAND EXPANDS. Despite the problems that some broadband Internet providers have faced in the past year or so, the market for consumers will continue to grow in coming years.

A recent report by Jupiter Media Metrix predicts that more than 40 percent of U.S. households that go online by 2006 will do so with a broadband Internet connection -- which includes cable Internet, DSL and satellite.

It is easy to believe that DSL would be the leading connection method, since DSL uses existing telephone lines coming into homes, and nearly every home has a telephone.

But Jupiter predicts that cable modems will serve the majority of the 35.1 million homes with broadband Internet access.

In its study, Jupiter found that consumers with broadband access use the Internet is slightly different ways.

For example, broadband users are more likely to download music, listen to music online or watch streaming video. Broadband users are also more likely to do their personal banking online, and manage their stock portfolio online.

WEBRING-LESS. Yahoo! announced recently it has sold its community network WebRing to Tim Killeen, one of the engineers who created the system years ago.

If you've visited a Web site and seen the familiar WebRing information box at the bottom, then you're aware of WebRing's service, which created online communities and allowed sites with common content and interests to link.

The move comes as Yahoo! tries to focus on its services that generate revenue -- or have the potential to do so.

WebRing members must transfer their sites to the new WebRing, though that only takes a few minutes at the Yahoo! WebRing site,

If the sites aren't transferred, they'll be lost and must be re-registered, according to the WebRing information page.

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