Will Internet Purchases be tax Free?

The tide may be turning towards a tax-free Internet purchase zone if Virginia Governor James S. Gilmore III has his way. As head of the Advisory Commission on Electronic Commerce, Gilmore has recommended, among other provisions, that levying taxes on virtual purchases would discourage the future of e-commerce.

His suggestions also include repealing a federal excise tax on local and long-distance telephone service, and for states to be free to spend welfare money on computers and Internet access for poor people. Savings for the the provision on telephone service would bring consumers more than $3 billion each year.

The Governor's recommendations come at the heels of what was an understanding on the panel that Internet purchases would indeed be taxed. Those on the tax-side of the fence favor the levies because it will otherwise promote competition among any retailer who does not have an online presence.

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