WASHINGTON -- A blue-ribbon committee meeting in San Francisco this week to resolve a volatile debate about Internet taxes may not get very far in its discussions.
The unlikely cause? Presidential campaign politics.
The congressionally created commission charged with weighing the unfettered growth of the Internet against the erosion of sales tax revenues for thousands of local jurisdictions was already divided.
Then, during this month's Republican presidential debates, Senator John McCain (R-Ariz.) and Steve Forbes called for a permanent ban on Internet taxes while Texas governor George W. Bush was silent on the issue.
A new Iowa poll released Sunday, just weeks before the 24 January GOP and Democratic caucuses, promises to make debate during the committee's meeting even more fractious.
Over 50 percent of the 402 Iowa residents polled in early December said purchases made over the Internet should not be taxed. Less than 37 percent said such fees were necessary, but only 28 percent of Iowans said that they would be more "likely" to vote for a presidential candidate who pledged no-new-taxes.
The poll was conducted by Frank Luntz for the conservative Progress and Freedom Foundation.
Like-minded groups, including Citizens for a Sound Economy and Americans for Tax Reform, called for candidates for public office to sign a tax moratorium pledge.
It says: "I will support making permanent the current ban on Internet access, sales or use taxes, and will work to reduce and ultimate [sic] eliminate discriminatory taxation of telecommunications services."
Republican candidates are scheduled to meet Monday in Iowa for another debate. Bush has said he backs extending the existing three-year, congressionally imposed moratorium on new Internet taxes, set to expire in 2001, an aide said.
But he reportedly will not decide on a permanent ban until after the panel headed by Virginia governor Jim Gilmore releases findings due in April 2000.
Forbes on Friday blasted Bush on taxes in general, saying Bush and vice president Al Gore "share the same values" on the issue.
The 19-member panel, which includes three Clinton administration delegates who have so far been generally silent on the highly charged issue, meets for a third time in San Francisco next week.
"Unfortunately, the level of political noise around this issue is heating up substantially with the presidential candidates taking positions," Richard Prem, tax partner with Deloitte & Touche, said. "I think its a recipe for gridlock."
Some observers predict the meeting could even break down amid threats by tax-ban proponents to call for a delegate-by-delegate vote on the sales tax issue.
"Many people think the whole thing is going to blow up in San Francisco," said Joseph Crosby, national director of state and local taxes for Ernst & Young. "The well [could become] so poisoned that they can't even talk to each other."
Panel-member Grover Norquist charges that President Clinton's representatives have been lobbying in support of a coalition of state and local government groups fighting hard to maintain authority to tax Internet sales.
"I am going to ask them why," Norquist said. "Is that their personal position or are they representing vice president Al Gore when they do this?" said Norquist, president of Americans for Tax Reform.
Reuters contributed to this report.
