A compromise package that will extend a federal ban on Internet access taxes for three years passed the House of Representatives just one day after passing the U.S. Senate. The House sent the package to President Bush, who is expected to sign the bill into law, but the next Congress is likely to consider making the access tax ban permanent if states are allowed to tax online sales.
“Enacting this legislation,” said House Judiciary Chairman James Sensenbrenner (R-Wisconsin), one of the staunchest opponents of Internet taxes, “is a big win for the majority of American Internet users.”
The bill also blocks multiple state and local taxation on goods and services bought online.
The voice-vote House action sent to Bush a bill that will block taxation of all kinds of Net connections from dialup to broadband. States now taxing broadband have three years to phase out those taxes, while those very few states who began taxing Net access before the original 1998 ban can continue collecting on them.
The House in 2003 wanted a permanent Net tax ban, but the Senate deadlocked on the issue, under pressure from senators – some of whom were former state governors – whose states argued that banning Net access taxes would cost them billions in tax revenues.
In fact, the version the Senate finally did pass was seen by the House as a weaker bill, but the House ultimately decided something was better than nothing. “Without any action by this Congress,” said Sensenbrenner in a floor speech, “the Internet economy and its participants are more vulnerable, even if we must act on a weaker bill.”
Sensenbrenner did agree to discuss one issue after the new Congress is seated in January. When Rep. Melvin Watt (D-North Carolina) suggested he’d help make the Net access tax ban permanent in the coming Congress if letting states tax online sales would be allowed, Sensenbrenner agreed to bring those issues up.
