Privacy, Net Tax High On Congress' Agenda

But industry still divided on whether government rules will bolster e-commerce

Congress began its new session last week prepared to make online privacy and Internet taxation its top high-tech issues. But as lawmakers gear up for a flurry of privacy bills, the high-tech industry remains divided over whether privacy legislation will help or hurt e-commerce.

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High on the Hill

Congress will take up key high-tech policy issues in earnest after the inauguration later this month.

Privacy

Dozens of bills are expected, regulating many aspects of privacy, from use of Social Security numbers to comprehensive online privacy rules.

Taxes

The Internet tax moratorium expires in October if Congress doesn't renew it.

Spam

Antispam legislation, which failed to pass last year, will return.

R&D Tax Credit

Despite getting a five-year extension last year, high-tech groups will push Congress to make it permanent.

Immigration

Firms will ask Congress to streamline hiring procedures.

"I think that if it's done right, [privacy legislation] is a real potential boon to the industry in terms of allaying people's fears about security and privacy in e-commerce transactions," said Chris Kelly, chief privacy officer at broadband provider Excite@Home Corp. in Redwood City, Calif.

But Harris Miller, president of the Information Technology Association of America in Arlington, Va., said there's no need for legislation, especially with the advent of the Platform for Privacy Preferences Project (P3P) standard, which would convert a company's privacy statement into a format that could be read by an end user's browser, allowing consumers to compare any P3P-compliant privacy statement to their preferences.

"We continue to feel very strongly that legislation is [neither] necessary [nor] appropriate," said Miller. "The technology and self-governance models are working."

Tax Moratorium Fair?

Taxes will also be a big issue. The three-year Internet tax moratorium, which blocks new and discriminatory taxes on Internet transactions, expires in October. But since the moratorium was passed by Congress in 1998, there has been a great awakening among brick-and-mortar businesses about the fairness of a system that forces traditional retailers to collect sales tax in many states while Internet retailers generally aren't required to collect it.

David Bullington, a vice president at Wal-Mart Stores Inc. in Bentonville, Ark., said he believes the moratorium extension "puts off the tax fairness question." He said he will push Congress to also take up the tax fairness issue and support the effort in more than two dozen states to simplify taxes as a first step to requiring sales tax collection by all sellers.

Congress could divide along party lines and not accomplish anything this year. But the bipartisan support for privacy protections makes it "more likely to pass in this Congress than less likely, simply because of that interest on both sides of the aisle," said Steve Emmert, director of government affairs at London-based Reed Elsevier PLC, which owns the Lexis-Nexis information services.

The House Commerce Committee will see a raft of privacy bills "very early on" in the session, congressional sources said. One expected bill will seek to give end users the ability to opt out from having cookies placed on their systems, the sources said.

The Senate Commerce Committee will likely see a reintroduction of Sen. John McCain's (R-Ariz.) privacy bill, which would require Web sites to disclose how data is used as well as give visitors to those sites a chance to limit how their information is used.

The privacy issue gained some attention in the November election. A number of winning candidates, including two freshmen senators—Bill Nelson (D-Fla.) and Maria Cantwell (D-Wash.)—highlighted Internet privacy in their campaigns.

"That really shows that this is an issue that may not be the rise and fall of a candidate but is something that is part of the package," said Ari Schwartz, a policy analyst at the Center for Democracy and Technology in Washington, a privacy advocacy group.

Copyright © 2001 IDG Communications, Inc.

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