Legislative leaders back 7-year extension on Internet tax ban

Leaders in the U.S. House will support extending a moratorium on taxing Internet services for another seven years, according to a leadership aide.

The House had earlier approved a four-year extension, but last week, the U.S. Senate approved a seven-year extension, surprising some observers.

A Democratic leadership aide told Bloomberg News that a House vote on the issue could come as early as Tuesday. Apparently, House leaders believed the Senate would be unwilling to support a permanent ban, so they pushed for the four-year extension instead.

The current nine-year ban on Internet taxation runs out on Thursday, November 1. Ending the moratorium would mean states and local governments could enact taxes on many forms of Internet access.

Details of the Senate measure, which protects e-mail from taxation, must be reconciled with the House bill before being sent along for President George W. Bush's signature.

Support is strong among service providers, such as Verizon Communications, Comcast Corp., and others, that the ban should be made permanent. Some congressional leaders agree, viewing Internet taxes as dampening competitiveness of U.S. businesses.

"By keeping the Internet tax-free and affordable, Congress can encourage Internet use for distance learning, telemedicine, commerce, and other important services," Sen. Ted Stevens, (R-AL), said in a statement.

The original sponsors, Sens. Tom Carper (D-DE), and Lamar Alexander (R-TN), in a joint statement called the agreement "a commonsense victory both for Internet users and for state and local governments. It continues the moratorium on Internet taxation, avoids unfunded federal mandates on states and cities, updates the definition of Internet access, and allows Congress to revisit the issue after seven years."

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