As park employees walked around in colonial costumes in the town where time stands still, business and policy leaders met today in a conference room here to begin puzzling out some of the most important questions of the future of the digital economy.

It was the first meeting of the federal Advisory Commission on Electronic Commerce, a 19-member panel created by the passage of the Internet Tax Freedom Act in 1998 to officially examine whether and how to tax commerce on the Internet. That law imposed a three-year moratorium on new Internet taxation to allow time to assess the tithing of cyberspace.

Virginia Gov. James S. Gilmore III (R) was elected chairman, as expected. "Our decision will affect every American citizen that buys, sells or trades on the Internet," he said.

The industry contends that taxing electronic commerce will slow the development of a driving force for economic growth in general. States, however, worry that as commerce shifts to the Internet, they will lose billions of dollars in sales tax revenue. But tax proponents can't agree on how to wring money from a network that pays no attention to political borders.

Representatives from both camps hold seats on the commission. Though there was little talk of the core issues in today's meeting, conflicting views surfaced in procedural votes.

The appointment of an executive director became the most hotly debated part of the meeting. Gilmore had agreed to hire an executive named Heather Rosenker in that job.

Her appointment was contested by Utah Gov. Mike Leavitt (R), who revealed that Rosenker's husband Mark is a vice president of the Electronic Industry Alliance, a high-tech trade association in Arlington.

After agreeing to discuss the issue in public, the panel members debated Rosenker's job as she sat on the dais with the panel and called the roll for votes for close to an hour. Gilmore defended his candidate, saying, "The ideology of the executive director is irrelevant."

"We're late in the game. It's late in the day, we were late getting started," said Paul C. Harris, a member of the Virginia House of Delegates from Charlottesville, suggesting the group get on with the process.

"I am very concerned that in 1999 a commission with one woman on it disqualifies a woman for a job because of who she's married to," said Grover Norquist, president of Americans for Tax Reform. "I'm going to let pass the unfairness of that statement," responded Leavitt.

Although Rosenker's appointment was eventually approved unanimously, many voiced concern. In view of her affiliation with the industry, "I think it's going to be difficult for our findings to be considered objective," said David Pottruck, president and co-CEO of Charles Schwab & Co.

Earlier in the day, Gilmore summed up the atmosphere with a joke: "This is a national congressional advisory committee on the diversity of views."

America Online Inc. President Bob Pittman did not attend this first meeting. AOL aides said he was out of the country. Richard Parsons, president of Time Warner Inc., was the only other missing member of the panel.

The commission includes three federal government representatives, eight state and local representatives and eight members of the electronics commerce industry, including AT&T Chairman Michael Armstrong.

After a series of meetings -- next in New York, then in California and Texas -- the panel plans to issue a report to Congress by next April.

Gilmore said the panel may reach a single conclusion to recommend to Congress. But panel member John Sidgmore, vice chairman of MCI WorldCom Inc., said he wouldn't be surprised if the group submitted majority and minority opinions signed by various members, much like the Supreme Court. He said the group agrees on at least one thing: "Universally the group is against taxing Internet access" -- the taxing of fees paid to Internet service providers to get online.

During the meeting, panel members heard from an array of technical experts to help them develop their opinions. Among them was Federal Trade Commission member Orson Swindle, who invoked the Hippocratic Oath, saying, "First, do no harm."

CAPTION: JAMES S. GILMORE III