State Efforts Could Harm Speech, E-Commerce, Group Warns

By Alex Tcherkassky, Reporter, BroadbandCensus.com

WASHINGTON, June 9, 2009 – Overly interventionist legislation could severely threaten the way Americans interact and conduct business on the Internet, NetChoice President Steve DelBianco said on a call to announce the group’s new initiative: Internet Advocates’ Watchlist for Ugly Laws (iAWFUL).

The project is a continuous round-up of ten most potentially harmful legislative proposals regarding internet and e-commerce.

Some of the proposed laws that iAWFUL views as particularly dangerous involve supposedly unfair and discriminatory taxation of online goods and services. DelBianco sees these proposed taxes as a “there’s a tax for that” mentality developed by cash-strapped states recognizing how much business is done online.

There are taxation proposals out of North Carolina and New York that he said unfairly tax online businesses. For instance, North Carolina’s Digital Downloads Tax Bill doesn’t make a distinction between compact discs bought in a store and those downloaded online – even though digital downloads often carry restrictions physical media does not have, he said.

Taxation of e-commerce “deserves to be debated in the light of day,” he said. The lack of taxes on online music purchases is an incentive to use “the greenest way to buy music. “

Another proposal which penalizes e-commerce is New York’s proposed Online Employment Services tax, which would classify job boards and resume services as “online employment services” subject to taxation. Brick and mortar job boards and services would not be taxed.

DelBianco also expressed concern over some states attempts to engage in “misguided childproofing” of the internet. The most heinous of these – and the worst overall proposed bill on the list – New Jersey’s Social Networking Safety Act. If passed, the bill would strip companies of the discretion to implement internal processes to determining if behavior on the site is indeed harassing, and require that they hand offending communications to the state as evidence.

But all social networking sites have effective means to report abuse, he said. Imposing a legal mandate could “lower the bar for what is considered harassment” and make it far easier to have someone’s access revoked unfairly. The New Jersey bill “has the potential to turn the ‘report abuse’ button into a form of abuse,” said NetChoice spokesman Hani Durzy.

State initiatives are particularly worrisome to NetChoice because they can have consequences reaching far beyond the state’s borders, and because of the speed with which states can act, DelBianco sald: often as quickly as two weeks from a draft bill to a signed law.