Another Blow is Struck Against Internet Taxes

The Senate Commerce Committee voted last week to make the ban on Internet access taxes permanent. This vote came close on the heels of action in the House of Representatives the previous week where the House Judiciary Committee also voted to make the ban permanent.

Under the Senate version of the bill, nine states currently imposing taxes on access fees will have to end that taxation within three years. The states, which include New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas, Washington, and Wisconsin, were already taxing Internet access fees when the current moratorium on such taxes went into place in 1998. Those states were allowed to continue that taxation at the time.

The Internet access charges differ from the sales tax charged on Internet purchases. There is still controversy over the possibility of legislation on Internet sales tax, however it appears that that topic may have been shelved for this year.

Treasury Secretary John Snow and Commerce Secretary Don Evans issued a joint statement praising the vote by the Senate Commerce Committee. "A permanent moratorium means permanent innovation. Keeping the Internet free of multiple or discriminatory taxes on electronic commerce will help create an environment for innovation and help ensure that electronic commerce remains a vital part of our economy. As policy makers, we need to encourage the roll out of new Internet services and not stifle innovation by imposing new taxes."

The next step for the bill to ban tax on Internet access fees is for the House and Senate to agree on wording for the bill, then both chambers will have to pass the legislation before it can go to the President for his signature. The current moratorium on Internet access fees expires November 1.

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