The Senate dithers while the internet tax ban teeters on the brink:
As deadline looms, Senate still debating fate of Internet tax moratorium
The ban was originally instituted in 1998 and prohibited local and state governments from collecting tax on various types of Internet connection services (ISPs, etc.). This was done out of concern that a tax on Internet connections, particularly broadband, would significantly slow its adoption rate in the US and keep certain citizens disconnected for good. The moratorium was extended in 2004 for three more years; that act represented a compromise between those who wanted to extend it permanently and those who wanted a shorter extension. At that time, however, taxes on VoIP services were approved due to growing concern over losing tax revenue from Internet-based phone services.Naturally, ISPs favor a more permanent ban, as lower fees paid to the government would mean broader adoption and hence greater revenues. In May, Verizon VP of State Tax Policy Annabelle Canning testified in favor of a permanent ban: “At a time when state and local economic development experts are touting broadband as critical to economic competitiveness, new taxes on Internet access could have a chilling effect on broadband investment,” said Canning. The National Governors Association, on the other hand, favors a shorter extension along with a clause that would grandfather in states that had already been allowed to collect Internet taxes in 1998—without such a clause, the Association argues that those states will lose up to $120 million per year in tax revenues under McCain’s proposal.
