Governor Gray Davis also signed a bill extending a moratorium on internet access taxes for three years, although doing so was largely symbolic since the moratorium was contingent upon the bill on sales tax becoming law.
The debate over on-line taxes is split between those that say e-commerce needs government support and those that say the support will be at the expense of small traditional businesses.
Davis said:
“In order for the internet to reach its full potential as a marketing medium and job creator it must be given time to mature… At present, it is less than 10 years old. Imposing sales taxes on internet transactions at this point in its young life would send the wrong signal about California’s international role as the incubator of the dot.com community.”