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TechnologyDaily Mobile
You Win Some, You Lose Some
Whether it was the high-tech industry's bipartisan strategy, or its darling status in Congress, the industry scored once again in getting its two "must-pass" pieces of legislation through this year's Congress, topping off a successful legislative session for high-tech companies.
With passage of permanent normal trade relations with China and an increase in the number of H-1B visas for foreign skilled workers, the industry was able to add to its list of policy triumphs in this Congress, which also included passage of Y2K litigation relief, relaxation of software encryption controls, digital signature legislation, patent reform and looser restrictions on computer export controls.
"Congress really understands that information technology is driving the economy," said Robert Holleyman, president of the Business Software Alliance, in explanation for the high-tech industry's success.
But while the industry has been successful in ticking off its highest priority policy goals, there were a number of issues that the industry was unable to get past Congress this year including another extension of a moratorium on Internet taxes, a bill to block "blacklisting" rules on government contractors and a bill encouraging the roll out of high-speed Internet access. It also was unable to stop the growing wave of privacy bills introduced in this year's Congress.
The next Congress is expected to revive these bills, but it is unclear whether the industry will be able to win the decisive victories of past years. The industry has been successful, in part, because of its ability to create broad coalitions to lobby Congress, yet upcoming issues do not have the same broad coalitions of support like PNTR or H-1B visas.
"In some ways, next year is going to be tougher than years past, because the must-pass legislation has passed and now we are dealing with multi-year issues," said Rhett Dawson, president of the Information Technology Industry (ITI) Council.
Privacy
Regarding online privacy, there are expectations that the industry will start to gel around a position before Congress returns next year, but there are still divisions within the industry over how far privacy legislation should go. In addition, the presidential candidate who wins the election may color the way the privacy legislation is developed. Vice President Al Gore, D, strongly has advocated for an Electronic Privacy Bill of Rights, while Texas Gov. George W. Bush, R, has called for a minimum "floor" of privacy protection legislation.
"The are members of Congress busting at the seams to get at this privacy issue," said Dawson. "I think this will be with us for several years."
Broadband
This year, there was no clear industry or congressional consensus on how to encourage the rollout of high-speed services. While high-tech companies would like to see as much broadband access as possible, they will have to wade through the entrenched politics of the telecommunications companies, which also want a piece of the broadband market. With telephone service revenues falling, long distance companies like AT&T are entering the wireless and cable markets, while also working to keep the Bell companies out of the market as long as possible. With the help of House Commerce Committee Chairman Tom Bliley, R-VA, AT&T has been successful this year in blocking Bell company efforts to expand into high-speed data services. But with Bliley retiring this year, and the next chairman to be either Rep. Billy Tauzin, R-LA, Rep. Mike Oxley, R-OH, or Rep. John Dingell, D-MI, the power struggle between the long-distance companies and the Bells is likely to tip in the Bells' favor.
'Blacklisting' Rules
Members of the broader business community and Congress also tried this session to get legislation passed that would block new rules establishing ethics standards for government contractors until a General Accounting Office study could be conducted to consider the impact of the rules. The so-called "blacklisting" rule, which the Clinton administration still may issue before the president leaves office, is designed to prevent companies with questionable labor relations and other ethically dubious practices from winning federal contracts. Three government agencies have publicly opposed the rules, including the Environmental Protection Agency, the Defense Department and the General Services Administration, but not enough momentum could be pulled together to pass the legislation to block the rule.
High-tech associations like the Information Technology Association of America and the American Electronics Association may revive the legislation next year. Again, the next president may impact the industry's success in blocking the proposed rule. If Gore wins in November, it will be a tough fight, as it is widely understood the rules were written after Gore promised labor unions in 1997 that he would establish tougher ethics standards on contractors. A Bush presidency might act to block the rules, given his stance for smaller government, said David Marin, spokesman for Rep. Tom Davis, R-VA, who sponsored the bill blocking the rule.
"It all hinges on next Tuesday, if Gov. Bush wins, then I think he'll drop this, if its Gore, then I think there is a strong likelihood they are implemented," said Marin.
Internet Taxes
Perhaps the only "must-pass" legislation next year will be on Internet taxes. Congress has to take action since a moratorium on Internet access taxes and discriminatory levies on the Internet expires in October 2001. Senate Commerce Committee Chairman John McCain, R-AZ, was unable to generate enough support for a five-year extension of the moratorium that passed in the House. And states and localities continue to lobby members of Congress to hold off until they can simplify their sales tax systems.
Online retailers have benefited from existing U.S. Supreme Court decisions that prohibit states from requiring merchants in other states to collect their sales taxes — unless those merchants have a physical presence in the taxing state. The National Governors' Association and the National Conference of State Legislatures jointly have proposed a system that would permit third parties to collect taxes using computerized tax collection software that would track sales by their geographic destination and apply the proper tax. However, some fear that such a system would be so complicated that it would lead to states colluding on tax systems and would discourage interstate tax competition.
In addition, recent economic data has shown that traditional retail sales still strongly outpace e-commerce, diminishing arguments that states are losing vast amounts of tax revenue due to Internet sales, according to Jason Thomas, technology and communications policy analyst for Citizens for the Sound Economy. Further, with the downturn on the stock market, the growth of Internet retail businesses are likely to slow in the next year.
"With Internet sales likely to be less than expected, the momentum behind a streamlined tax plan like that proposed by the governors is likely to fall flat," said Thomas. His group plans to push Congress to enact a moratorium that enables the states to come up with their own system for taxing Internet sales.
Through the Streamlined Sales Tax Project, states are trying to develop a model to tax e-commerce transactions. The project conducted its last public hearing in Chicago in mid-October to get feedback from government and business representatives on the work done so far by the project — and to reconcile differences in sales tax definitions. "There are a lot of directions Congress can take on this," said Thomas. "It depends upon whether the GOP maintains control of the House."
 | - by Bara Vaida |
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