Read His Lips: No New Net Taxes

SAN FRANCISCO: The governors were at the Internet gates this week, trying to sink their tax fangs into the smooth young neck of online commerce. And who should bar the door but President Clinton, who with a single speech ended months of hedging and called for passage this year of the Internet Tax Freedom Act, which would impose a moratorium of up to five years on new taxes on electronic commerce and the Internet.

The bill, a blessing for retailers and a slap at the states, should be a cinch to pass with Clinton's endorsement, says TIME technology correspondent Declan McCullagh. Best of all for netizens, "it sets a precedent for regulation of the Internet," he says. "It's an indication that Washington is still willing to take a hands-off approach , rather than stifle the Internet through bureaucratic meddling."

But no one knows like the Internet crowd that the Big G is not to be trusted. "Governments will always find a way to tax the Net," says McCullagh, who points out a recent Clinton-Gore project: the $2.25 billion library-and-school universal service fund, which was paid for with surcharges on extra home-phone lines -- traditionally used for Internet hookup. "Despite what Clinton wants you to hear," he says, "that's hardly deregulatory."