E-Commerce Tax Not Likely to Hurt Economy

Knoxville — A federal e-commerce commission said Tuesday that Congress should extend the moratorium on new Internet taxes and create additional tax breaks for electronic retailers.

But a University of Tennessee economist said it is unlikely that a tax on Internet sales would hurt the overall economy.

“The magnitude of a shift in the way the government collects taxes on electronic commerce would be relatively small,” said Dr. Bill Fox. “Actually, in the long term, it would stimulate the economy.”

“I know that surprises people,” Fox said, “but in the long run, when we let the economy make decisions instead of the government, the economy always wins.”

The Advisory Commission on Electronic Commerce suggested that Congress extend the moratorium on Internet sales taxes to October 2006.

The commission said Tuesday that some of its members were opposed to state sales tax collections on e-commerce, but others were in favor of some form of sales tax collection.