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Tuesday, Oct 3, 2023

COMMENTARYThe Next Great Forum for Debate: E-Regulation

When I first opened the Sacramento office of the American Electronics Association a decade ago, state legislators and constitutional officers had little interest in technology issues.

Times have changed.

Just a few months into our fresh new century and state legislative session, California’s leaders have rushed to both embrace and regulate technology. Seemingly overnight, our industry is suddenly front and center in almost all areas of major public policy.

The governor, attorney general, secretary of state and controller have all weighed in with their programs and plans for technology. And in the Legislature, bills are being drafted to address everything from the “Digital Divide” to Internet taxation.

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Because of technology’s relevance to a growing number of Californians, action in the Capitol this year will not only set a foundation for years to come, but it is destined to be high impact. The technology industry urges state government leaders to exercise long-term vision when considering the following issues in 2000.


Both the federal and California Internet Tax Freedom Acts expire soon. These acts have helped foster a favorable climate for the tech industry, small businesses, E-commerce and E-government. All are flourishing. The benefits of this laissez faire approach have been considerable:

– State and local tax coffers are swelling with billion-dollar surpluses resulting from high-tech employees’ rising personal income, corporation taxes, as well as capital gains stemming from exercised stock options.

– California boasts nearly 800,000 high-tech jobs.

– The average annual wage for high-tech jobs in California is $62,771 , almost double the $32,982 average private sector wage.

– High-tech accounts for $64 billion of California’s $110-billion export total.

– Nationwide, E-commerce is exploding. Internet sales were $200 million in 1994, $8 billion in 1998 and by 2002 are projected to be $350 billion.

– Sales tax collections are at an all-time high (growing by 8 percent in 1999).

All this is threatened by intense lobbying from local governments, which will want to resist extending the moratorium against new or discriminatory taxes on the Internet. Instead, local governments will want to squeeze revenue from E-commerce. In the long run, this strategy will kill the goose laying the golden eggs.

AEA recommends the following Internet taxation principals to guide deliberations of our state elected officials:

– Invoke no greater tax burden than already exists for traditional means of commerce.

– Ensure simplicity in administration.

– Avoid new taxes on the Internet.

– Consider tax issues in a global context since the Internet transcends geographic and national boundaries.


Recent headlines about computer hackers indicate the issue of individual privacy on the Internet is not going away. This is a concern for most individuals whose personal information, spending and online habits are easily tracked on the Internet.

The high-tech industry deserves credit for developing encryption and other techniques for consumers to protect their privacy while online. Government leaders should remember that the expansion of E-commerce and online technologies depends on the industry earning the trust of customers.

Simply put, we have an interest in assuring privacy and will work closely with legislators to put reasonable safeguards in place. But we likewise ask state lawmakers to refrain from draconian measures that put California companies and consumers at a disadvantage.

The Digital Divide

The gap between the technology “haves” and “have-nots” is just now beginning to be studied. All Californians should realize the benefits of technology, yet new government programs do not appear to be the best solution.

Government should focus its attention on providing greater access to technology and the Internet, including more computers in classrooms, libraries and community centers. While there is no quick fix for bridging the Digital Divide, access to technology and a focus on educating all children are indeed the right steps to take.


The relationship between world-class public schools and the continued growth of the high-tech industry could not be more direct. Low performing schools make it impossible to hire qualified workers and convince employees with families to relocate to California.

We applaud Gov. Gray Davis for making education his top priority and fully support his emphasis on math and science education. The industry urges him to put more resources behind education technology in the classroom and make sure teachers know how to use it.

Furthermore, we simply must reverse a situation in which a decreasing number of college students are graduating with degrees in high-tech fields such as engineering.


The most encouraging trend on the horizon is the fact that California government has decided to fully embrace technology as a valuable tool for serving its customers , the people of California. E-government, which includes everything from online car registration to independent voting, will mean greater convenience and easier access to government for ordinary citizens.

The coming century will undoubtedly be dominated by technology. California’s policy-makers face a critical decision: Will the technology boom continue here in California, or must innovative companies go elsewhere to succeed? California’s course for the 21st century depends on the decisions they make today.

Casazza is vice president of California public affairs for the American Electronics Association.


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