TELECOM Digest OnLine - Sorted: Internet Taxation Ban Attracts Congressional Debate

Internet Taxation Ban Attracts Congressional Debate

Telecom News Wire (
Mon, 28 May 2007 14:37:20 -0500

Four bills addressing Internet taxation are pending in Congress as
House and Senate committees this week held hearings on the matter.

The original moratorium banning Internet taxes will expire Nov. 1,
unless lawmakers extend the date or institute a permanent freeze.

Companies such as Verizon Communications Inc. support a permanent ban
on Internet access taxes while states want the ability to tax however
they please. Carriers say competition unhindered by surcharges
promotes broadband adoption. But states want the right to tax access
services such as Web hosting and connectivity so they can beef up
their individual coffers.

The issue does not necessarily split down partisan lines, either. Sen.
Tom Carper, D-Del., on Wednesday introduced a bill that would extend
the tax ban another four years. On the other hand, Sen. Daniel Inouye,
D-Hawaii, chairman of the Senate Commerce Committee, said the
moratorium should be lengthened temporarily, if at all.

Among the provisions in the proposal to extend the original Internet
Tax Freedom Act (the one set to expire later this year) is language
that alters the definition of tax-free Internet access so consumer
e-mail and instant messaging remain free; closes a loophole that puts
state revenue at risk; and continues the original grandfather clause
to protect existing revenue.

The National Governors Association (NGA) on Tuesday said Carper's
ideas are reasonable.

"Governors must maintain the authority to manage their state's revenue
streams. This legislation protects that authority and clarifies the
definition of Internet access so states are not at risk of losing
significant revenues," said Raymond C. Scheppach, the NGA's executive

Verizon, meanwhile, called for a permanent Internet tax ban, which the
other three bills would provide.

"Competition between providers is making high-speed Internet access more
affordable and available than ever," said Peter Davidson, Verizon senior
vice president for federal government relations. "This hearing makes
clear there is no appetite in Congress to open the door this fall to
regressive new taxes that would slow this great progress."

National Governors Association
U.S. House
U.S. Senate
Verizon Communications Inc.

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