WASHINGTON - The House of Representatives voted Tuesday to pass a four-year extension of a moratorium on Internet-access taxes that is set to expire on Nov. 1.
The Internet Tax Freedom Act, which was first passed in 1998 and was extended in 2001 and 2004, prohibits local and state governments from collecting taxes on various types of Internet services. It was developed out of concern that a tax would slow the adoption rate of Internet connections, especially broadband, in the United States.
Proponents of the moratorium's extension include Sen. John McCain (R-Ariz.), a co-sponsor of a version of the bill that would permanently ban Internet-access taxes.
"In a little over a month, Americans will be forced to pay more to access the Internet, receive emails on their BlackBerries and use the Internet on their cell phones if the Democratic leadership refuses to allow the Senate to debate and pass this legislation," he said during hearings on Sept. 20.
If the moratorium on Internet-access taxes is not extended, prices for Internet service could increase by as much as 17 percent, some service providers have estimated.
Internet-service providers favor a permanent ban that would lead to broader adoption and increased revenue, Verizon Vice President of State Tax Policy Annabelle Canning testified in May.
"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," Canning said.
The National Governors Association argued that states that already had been allowed to collect Internet taxes in 1998 will lose as much as $120 million per year in revenue under McCain's proposal. The association favors a shorter extension.
