Democrats Warned to Stop Internet Tax

Key Democratic advisers to Congress and former President Clinton have opened a campaign to warn lawmakers that failure to extend the Internet tax moratorium will hurt their re-election chances and public approval ratings.

"If we don't do this, it will give the Republicans another big issue to whack us with in the elections," said a former Clinton official. And even though ending the moratorium would allow only state and local governments to impose sales taxes, "Congress would get the blame."

The ban on taxing items purchased over the Internet is scheduled to expire November 1. The campaign to extend the ban is being conducted on a "background" basis; key Democratic advisers are speaking anonymously to lawmakers and reporters covering the issue. One key official said, however, that the Democrats in Congress are in a bind over the tax issue because they are seeking new ways to fund pet projects and program expansions like the House- and Senate- approved child healthcare program President Bush vetoed yesterday.

"I'll tell you what the problem is: The problem is that the Democrats need new revenue sources for their programs and there just isn't any money out there. Some figure, why should Internet purchases be free when stuff you buy at stores is taxed?" said another official. Most of the Democratic advisers, however, believe that the moratorium will be extended because of public pressure and arguments from businesses involved in Internet commerce that a tax would hurt the economy.

—Paul Bedard