Iowa is among a handful of states which impose state sales tax on localcompanies which provide a link to the Internet. If you use America On-Lineor CompuServe, you don’t pay Iowa’s five-percent sales tax. The Iowalegislature has approved a bill to end the inequity. Senator LarryMc-Kibben, a republican from Marshalltown, says the Internet tax is unfairto people like him who use an Iowa-based Internet service.In 1998, the U-S Congress passed a law which prohibits states from imposingnew sales taxes on “e-commerce” — like buying books and compact discs atamazon dot com.In 1998, ten states — including Iowa — imposed sales tax on Internetproviders within their borders.Governor Vilsack last Monday indicated he is inclined to sign the bill intolaw to help Iowa-based Internet providers compete with the big companieslike A-O-L.
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