Internet Tax Ban Clears House

The U.S. House of Representatives passed a bill on Wednesday that would permanently ban US governments from levying taxes which are unique to the Internet.In 1998, Congress issued a three-year moratorium on Internet-only taxes and then renewed it in 2001. The moratorium will expire on Nov. 1 unless the current bill is approved by the Senate.

The House of Representatives, passed the Internet Tax Nondiscrimination Act, which would prohibit taxing jurisdictions in the U.S. from levying such taxes as e-mail taxes, bandwidth taxes, or bit taxes. To become law, the bill first has to pass the U.S. Senate and then be signed by President Bush, who has Veto power.

The bill would roll back Internet access taxes in nine states, with totals ranging from $3.6 million and $45 million from the tax last year, according to one estimate.

House Republicans cheered the passage of the bill. Congressman Chris Cannon (R-UT), Chairman of the Subcommittee with jurisdiction, hailed passage of the bill as a catalyst for economic growth. H.R. 49 permanently extends the current, but temporary, moratorium on access fees, new taxes and discriminatory taxes on the Internet.

“We have debated Internet tax moratoria several times since 1998. Today is a historic day. It is the first time that we have had the chance in the House to extend this moratorium permanently. This bill would broaden access to the Internet, expand consumer choice, promote certainty and growth in the IT sector of our economy, and encourage the deployment of broadband services at lower prices. Today we establish a consistent national policy of not taxing Internet access through this bill,” Cannon said on the Floor of the House today.

Some Democrats disagree with the bill that will not ban previous Internet sales taxes issued by states. “Although this bill will necessarily result in the loss or potential loss of revenue to some states, it will promote the continued development, emergence and widespread access to the Internet. And it will do so in a fair and technologically neutral manner,” said Democrat Rep. Melvin Watt.

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