It’s all very confusing. Whether or not you pay taxes on your high-speed Internet connection has everything to do with how you connect — phone line, cable or digital — as well as what state you live in.
While each service is comparable in access to the Internet, only telephone data lines are charged access taxes in 18 states, a tax that a bill pending in the Senate would repeal permanently.
Sen. George Allen (R-VA), sponsor of the bill, told the New York Times that it is unfair to charge a tax on one form of Internet access but not others. "You're giving the advantage to one technology over another," Allen said. "It's discriminatory taxes."
A similar bill to eliminate Internet access taxes passed the House in September, despite protests mostly from cash-strapped state and local governments who see the taxes as important revenue sources.
The battleground for Internet broadband customers has become hotly competitive in the past five years. Cable companies hold about two-thirds of the market and phone companies control the other third, the Times reported. Phone companies say the additional taxes hurt their ability to compete with cable broadband providers.
Allen’s bill would prohibit all taxes on Internet access, including digital subscriber lines while giving state and local governments three years to phase out the Internet taxes, the Times reported.