- News>
- Internet & Social Media
Senate committee approves Internet tax ban
Washington, Aug 01: Senate Commerce Committee on Thursday toughened an existing ban on Internet access taxes by voting to make it permanent and requiring nine states to repeal existing taxes on access fees.
Washington, Aug 01: Senate Commerce Committee on Thursday toughened an existing ban on Internet access taxes by voting to make it permanent and requiring nine states to repeal existing taxes on access fees.
The measure would make permanent a ban on the access taxes currently due to expire in November, and would require states that have existing taxes in place to remove them within three years.
Access taxes -- levied on the monthly fees Internet users pay to providers like EarthLink Inc.ELNK.O -- have been prohibited under a temporary ban since 1998, but nine states who had such taxes in place before the ban was enacted are currently allowed to keep them.
The nine states -- New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas, Washington and Wisconsin -- take in between $3.6 million and $45 million each year from such taxes.
The committee also extended the ban to include all forms of Internet access, closing a loophole that Internet businesses had feared could be used to tax wireless and high-speed service.
The House of Representatives Judiciary Committee approved a similar bill two weeks ago. The measure must be passed by both houses of Congress and signed by President Bush before it becomes law.
The ban does not apply to online sales taxes, which are prohibited by a Supreme Court decision unless the retailer has a substantial presence in that state.
Many states, facing revenue crunches, have argued that the Internet is now a mature business like any other and should be taxed accordingly. But their appeals to allow online access or sales taxes have found little support this year.
Several high-tech trade groups praised the committee vote, as did two Bush administration officials who have been pushing to make the ban permanent.
"As policy makers, we need to encourage the roll-out of new Internet services and not stifle innovation by imposing new taxes," Treasury Secretary John Snow and Commerce Secretary Don Evans said in a joint statement. Bureau Report
Access taxes -- levied on the monthly fees Internet users pay to providers like EarthLink Inc.ELNK.O -- have been prohibited under a temporary ban since 1998, but nine states who had such taxes in place before the ban was enacted are currently allowed to keep them.
The nine states -- New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas, Washington and Wisconsin -- take in between $3.6 million and $45 million each year from such taxes.
The committee also extended the ban to include all forms of Internet access, closing a loophole that Internet businesses had feared could be used to tax wireless and high-speed service.
The House of Representatives Judiciary Committee approved a similar bill two weeks ago. The measure must be passed by both houses of Congress and signed by President Bush before it becomes law.
The ban does not apply to online sales taxes, which are prohibited by a Supreme Court decision unless the retailer has a substantial presence in that state.
Many states, facing revenue crunches, have argued that the Internet is now a mature business like any other and should be taxed accordingly. But their appeals to allow online access or sales taxes have found little support this year.
Several high-tech trade groups praised the committee vote, as did two Bush administration officials who have been pushing to make the ban permanent.
"As policy makers, we need to encourage the roll-out of new Internet services and not stifle innovation by imposing new taxes," Treasury Secretary John Snow and Commerce Secretary Don Evans said in a joint statement. Bureau Report