Internet Tax Study Raises More Questions Than Answers

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Should products sold over the Internet be tax-free? This question is the focus of an Internet tax study assigned to a 19-member U.S. panel named by Congress. Under a 1998 "cyberlaw," a three-year tax reprieve was set for new state and local Internet taxation to give the panel time to produce the in-depth study.

But obtaining funding for the study seems to be as cumbersome as finding an answer to the initial question. The Advisory Commission on Electronic Commerce reported that it had collected $450,000 from private industry to fund the study, but still needs an additional $2 million from Capitol Hill to complete the job.

Although Congress normally authorizes funding when it creates advisory commissions, this case is unique because of fears that federal funding could look like an attempt to influence the study in favor of the government.

So for now, both the Internet tax and commission funding question remains unanswered.

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