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Mayors ding bill to ban Net taxes

While federal legislation to halt local taxes on the Net awaits a crucial vote, hundreds of city mayors line up to stop the bill.

While federal legislation to halt local taxes on the Net awaits a crucial vote tomorrow, hundreds of city mayors have lined up to stop the bill.

At the U.S. Conference of Mayors meeting in San Francisco yesterday, more than 315 mayors adopted a resolution stating they are firmly against the Internet Tax Freedom Act.

Introduced by Sen. Ron Wyden (D-Oregon) and Rep. Chris Cox (R-California), the bill would temporarily prohibit state and local governments from taxing online transactions.

Local governments say the Wyden-Cox bill impedes on their constitutional right to implement taxes. The bill "would create a virtually unprecedented intrusion into inherently local affairs," the resolution charged.

But the proposal's supporters, such as the Clinton administration, say electronic commerce will never take off if cities and states rush in to tax the budding industry. The federal government has the authority to regulate interstate commerce, including transactions over the global network, supporters add.

The mayors' declaration poses little or no threat to the bill's success in passing the Senate Commerce, Science, and Transportation Committee tomorrow, according to Dave McClure, executive director of the Association of Online Professionals, which backs the bill.

"It's not a surprise that they are concerned about their ability to tax. But we disagree that the Wyden-Cox tax act is some how a preemption of states' rights," he said. "We simply want the Internet free from taxation in multiple jurisdictions."

An amendment that would put a time limit on the moratorium, which may ease local officials fears, will be also introduced tomorrow, McClure added.

A separate bill intended to shield the Net from federal taxes is already awaiting consideration by the House Ways and Means Committee.

Introduced by Rep. Dave Weldon (R-Florida), the bill would amend the IRS code to exempt Internet access and online service fees from taxes related to federal trade. The bill would also prevent federal agencies or departments, such as the IRS, from funding studies to explore potential revenue streams related to Net taxation.