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Deal will keep Internet tax-free for now

Internet tax graphic March 19, 1998
Web posted at: 12:42 p.m. EST (1742 GMT)

WASHINGTON (CNN) -- An agreement has been reached to keep items sold on the Internet free of new taxes, at least for the next few years, CNN has learned.

The agreement, hammered out between Rep. Christopher Cox, R-California and Utah Gov. Michael Leavitt, calls for a three-year moratorium on new taxes.

However, it would let state and local governments keep any taxes already imposed on online services. The plan would also set up a congressional commission to find ways to tax the Internet.

The move comes after disagreement over a proposed House bill, called the Internet Tax Freedom Act, that would have kept state and local governments from taxing the Internet for at least six years.

Leavitt and Cox were expected to formally announce the compromise agreement in Washington later Thursday. Sen. John McCain, R-Arizona, was also expected to endorse the agreement.

 
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